Several world-renowned economists predict that Canadian real estate prices will fall. According to Oxford Economics’ latest forecast, home prices will fall by 24% by mid-2024. This fall, the price declines are expected to begin with higher interest rates and anti-speculation policies. This fall, they forecast a 24% decline that will bottom by mid-2024.
Between 2025 and 2030, they expect the supply to outpace the demand and keep annual growth at a lower level. By mid-2028, incomes will catch up and affordability will return. A combination of price declines and stagnation minimizes fallout from the forecast.
Inflation affects affordability according to the firm’s use of nominal price data. Inflation-adjusted returns are a key feature of CREA’s benchmark, which investors should keep in mind. Suppose the BoC manages a 2-point inflation target from 2024 to 2030. In 2020, the price of a home was 5% higher than it was in 2030. A decade of 5% growth would be a significant change from the previous decade.
Investing in housing takes money away from more productive areas of the economy. In cities that prioritize home price growth over local economic growth, future economic growth is stunted. A city or country with a better value proposition becomes more appealing as a result.
Interesting facts to consider as we move through 2022! Interested on how you can invest in the current Housing Market? Give me a call, and let’s discuss!