Canadian house prices rose sharply in 2021!
What drove the house prices? This was fuelled by ultra-low interest rates throughout lenders. There was also huge demand for larger homes. People wanted more outdoor space. Affordability was driven by massive fiscal support from the government.
Canada’s housing market was on a tear in recent months. Home prices escalated sharply and we hit record highs this year.
So, what does 2021 look like? Well, no one has a crystal ball but here are our Canada Housing Market Predictions For 2022!
1) Lending Is Going To Get Tighter:
On April 8th, 2021 Canada’s financial regulator proposed making lending tighter. This comes on the heals of other mortgage rules among the Group of Seven central banks suggesting a scale back on pandemic support.
2) Buyers Have Less Purchasing Power
The impact inflation has on the time value of money is that it decreases the value of a dollar over time. This is bad for Canadian’s. Our wages remain relatively the the same but inflation is causing the prices of goods and services to increase. many things have shrunk if you are paying attention and prices have gone up. This takes a larger percentage of your income to purchase the same good or services but you have no more money. So, if house prices go up and up – buy your wage remains the same – you can buy less and less of a home.
3) Government Support
Many people were able to maintain life at status quo or even better thanks to the government hand outs. However, these are coming to end and more and more people will soon start feeling the pinch of the slow down. This will have a trickle down effect for everyone involved.
All signs now point to a slowdown in the national housing market, based on TD Economics’ interpretation of the latest housing data.