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The housing market outlook suggests a potential return to peak home prices seen in early 2022 by next year, with forecasts indicating new highs by 2026. Despite an increase in rental housing supply in 2023, the projection suggests demand will outpace supply, resulting in higher rents and lower vacancy rates in the years ahead. Unfavorable financing conditions may hinder new rental projects in 2024, but the chief economist anticipates a shift by 2025-2026, with lower interest rates, continued government support, and policies encouraging urban density making more projects viable.

There are concerns about home affordability over the next three years, as declining mortgage rates and significant population growth since the 1950s are expected to drive a rebound in home sales and prices. Despite a one-third drop in home sales from their early 2021 peak to the end of 2023, accompanied by a nearly 15% price decline, there's a growing pool of potential buyers due to robust population growth, increased savings, and higher incomes. Anticipating a return of buyers to the market as mortgage rates decrease and economic uncertainty wanes in the latter half of 2024, a resurgence is predicted, driven by increased demand for lower-priced homes across Canada.

Looking ahead, housing starts in Canada are expected to decline this year before recovering in 2025 and 2026, largely due to the lagged effect of higher interest rates on new construction. Regional variations are forecasted, with Ontario and B.C. driving the national decline in housing starts, while the Prairie provinces are expected to perform well due to affordable home prices and a stronger economic outlook. Quebec's housing starts are expected to grow but remain below pre-pandemic levels, while the Atlantic region may see less pressure on new home construction due to a realignment with weaker population growth.

Read the full article on: CTV NEWS