Canada’s federal housing agency is doubling down on its pessimistic forecast for the future of the country’s housing market.
Citing "tremendous risks" from the COVID-19 pandemic, Canada Mortgage and Housing Corp. (CMHC) said it stands by its forecast, first issued in May, that average prices will fall between 9% and 18% from pre-pandemic levels before beginning to recover in the first half of 2021.
CMHC Chief Economist Bob Dugan reiterated that forecast in a call with journalists, although he cautioned that it’s difficult to predict the "peaks and troughs."
In its latest housing market outlook, CMHC predicts an average house price in Canada of $460,292 in the first quarter 2021, based on the midpoint of a high and low range. The average price for August, reported last week by the Canadian Real Estate Association (CREA), was $586,000. That means if CMHC’s forecast is correct, prices will plunge 21% between now and the end of March next year.
Pent-up demand has been driving Canada’s housing market to new heights in recent months. Nationally, sales rose 6.2% in August, the fourth straight month of strong gains after the market froze at the height of the COVID-19 pandemic, according to CREA. Sales are now 33.5% above year-earlier levels. Benchmark prices rose 1.7% in August and are now 9.4% higher than in August 2019.
