The number of Canadians expecting home prices to grow is falling very quickly. BMO senior economist Robert Kavcic weighed in on the latest home price growth sentiment. The expectation of growth is beginning to fall nearly as fast as it grew. While it doesn’t mean lower prices (yet), it shows attitudes supporting these price levels are rapidly shifting.
House Price Expectations Are On The Decline
Canadian expectations of home price growth are finally starting to fall. The latest numbers from a Nanos/Bloomberg poll show fewer people now expect prices to rise. While the rate is very high, it’s down sharply from the recent peak. Expectations are falling as fast as they increased.
“Canada’s housing market remains extremely strong, but expectations of price growth look like they may have peaked. Sales and price growth could follow suit,” said Kavcic.
Though he emphasized falling price expectations don’t necessarily mean price declines. “Important: This is not to say that the market is going to decline, but the rate of change may be ready to slow down. Hey, it’s a start,” he added.
Factors That Led To Market Pressures Are Easing
Many of the factors that created a tight market are beginning to reverse, according to the bank. Home sales are still high, but cooled in key markets like Greater Toronto. New inventory is starting to appear, relieving some pressure on prices. Policy is looking a little more hawkish, with rate hikes now coming sooner than expected. Most important, people are thinking about a post-pandemic life — outside of the home.
“There’s still a long way to go until we find a more balanced market, but this shows how effective even small tweaks to monetary policy can be on this front,” he said.
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