Canadian Real Estate Prices Expected To Fall Further: Bank of Canada 

Canada’s central bank doesn’t see the country’s real estate slump ending soon. Bank of Canada (BoC) shared its expectations for housing in its latest Monetary Policy Report (MPR). The central bank expects falling home sales to find a bottom in the near future. However, it won’t be enough to stop housing from dragging the economy, or prevent prices from falling further. They still see prices falling, especially in regions that saw the largest booms over the past two years. 

Bank of Canada Sees Prices Falling Even Further 

Higher interest rates have helped reduce prices, and are forecast to keep working. By raising interest rates, servicing costs increase and leverage shrinks. This reduces the qualified pool of buyers, resulting in lower liquidity. In order to be sold, buyers either need to make more money or prices need to fall. The former is a little harder in a realistic time frame than the latter.

Since the BoC isn’t planning any cuts, it’s easy to see why they expect this to continue. “The pullback in housing activity that began in 2022 is expected to continue over the near term,” reads the MPR. 

Adding, “the pullback in housing activity that began in 2022 is expected to continue over the near term.”  

Canadian Real Estate Sales Forecast To Firm

Canadian home sales are expected to firm, after making a sharp decline. Resales through the MLS in 2022 fell 25.2% compared to the previous year. The volume is now way below the average, and some normalization is reasonable to expect. Home prices have dropped, at least a little, and are likely to attract buyers.

“Growth in new construction and housing resales will likely pick up by the second half of 2023, supported by low inventories and strong demand from immigration,” writes the BoC. 

Canada’s Housing Market Is Forecast To Be A Drag On The Economy 

Canada’s housing slowdown is forecast to weigh down the economy in the near term. The BoC estimates housing reduced GDP growth by 1.0 point in 2022, worse than the 0.9 points forecast prior. This year, they expect it to trim 0.7 points of growth, once again a downward revision. It’s an improvement but not much when you’re discussing an economy growing 1 point in total. 

The BoC finally sees a return to growth next year, but it’s not expected to be anything like 2021. They’re forecasting housing will provide 0.3 points of growth in 2024. In contrast, it provided 1.3 points in 2021—over a quarter of the economy’s total.



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  • Kate 1 year ago

    I think there is a huge outflow of people is boiling due to high cost of housing and living. Turs there is no reason for many Europeans to live here in the cold without a reliable roof.

  • george 1 year ago

    But Stats Canada announced 2 days ago another consecutive growth for this year…

  • dave richards 1 year ago

    What teacup is the bank looking into. Mine says at least another 20% fall this year and propably more in 2024, Sounds like they are shilling for the real estate industry

  • Pasquale 1 year ago

    They keep trying to scare people lol, honestly if you don’t buy a house now the prices are going to start going back up pretty soon. Especially in the GTA, prices haven’t gone down on homes. They just stopped going up for a bit, get in now because prices are going to go up mid year and will be even less affordable. Stop listening to these pros who are always wrong.

  • Pasquale 1 year ago

    And why was comment removed…I wasn’t rude.or anything. Just said the truth that prices have not gone down in GTA. So because it doesn’t fit your panic narrative comment gets removed. Gotta love the media in all forms these days.

  • georgie 1 year ago

    even the top advisor in england said no need for interesy rates increases at all as inflation caused mostly by labour shortgage and high shipping costs

  • geoi rgie 1 year ago

    there wasnt a real estate slump until the banks raised the interest rates for no reason

    • Trader Jim 1 year ago

      and there was no real estate boom until the central bank began buying mortgage bonds in 2019, then cutting rates to stimulate buying homes.

  • Mike 1 year ago

    Raising Interest rates is not the solution. Raising interest rate can reduce the price 10 to 15%, but that does not solve the problem. When the rate is high, means qualifying for a mortgage becomes even harder, so the 1st time home buyers will be completely left out of the market.
    This will just reduce the new construction, and slow the trades work force.
    BoC raising the interest rate will not be beneficial, but will hurt the economy.

    • Leah 1 year ago

      Economies grow by spending, not by the amount you can finance on a home. If you want a strong economy, you don’t have expensive housing since it diverts the spending to non-productive debt service. This is finance 101.

  • Paul McKunt 1 year ago

    Hmmmm. Can’t drop too much because so many people purchased 750K townhomes with 2% variable mortgages
    If those townhomes drop to 500K, we don’t wanna see the old walk-a-way move

Comments are closed.