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Economists forecast rising home sales, prices in 2022
Most of Canada’s biggest mortgage lenders and its largest real estate groups are forecasting a robust housing market this year, with some seeing double-digit sale increases and sharp price hikes, despite rising lending rates and a shortage of homes for sale.
CIBC, however, believes overall residential sales will decline this year, though condo prices could rise.
And the BC Real Estate Association sees the provincial sales pace slowing, with a 15 percent decline in home transactions in 2022, compared to the record-setting pace of 2021.
The outlook from most analysts parallels that of the Canadian Real Estate Association, which expects 2022 home sales to increase 8.6 percent compared to last year, with prices rising 7.6 percent.
Royal LePage, citing rising immigration, predicts that average house prices will increase 10.5 percent in 2022. Re/Max Canada sees a 9.2 percent price increase, year-over-year.
All the forecasts, however, are shadowed by the fact that most analysts expect the Bank of Canada’s overnight lending rate to increase from its current setting of 0.25 percent to 1.25 percent by the end of 2022, in a series of hikes.
The Royal Bank of Canada predicts 2022 home sales to increase 19.8 percent from a year earlier, with the average home price increasing 3.3 percent “We expect extremely tight demand-supply conditions will keep prices under intense upward pressure in the near term though we see such pressure easing significantly by the second half of 2022 as markets achieve a better balance.”
The Toronto Dominion Bank is forecasting a 7 percent increase in home prices this year, noting, “both new and resale markets remain drum-tight, suggesting another strong year for price growth is in the cards for 2022.”
The Canadian Imperial Bank of Commerce (CIBC) is the outlier, cautioning that home sales could drop in 2022 and condos may be the only sector to see price growth.
“Overall, we expect sales to fall by 15 percent in 2022, relative to the elevated level seen in 2021—an environment that is consistent with a notable deceleration in-home price inflation next year,” wrote economist Benjamin Tal. “This environment is also likely to impact the relative value of condos vs. a single-detached unit. Logic suggests that higher rates will channel more activity into the more affordable condo market, resulting in relative price outperformance in that market.”
- CIBC is the outlier in forecasting a national 15 percent drop in sales compared to 2021WI StaffJan 7, 2022 4:12 PM
- https://www.westerninvestor.com/british-columbia/economists-forecast-rising-home-sales-prices-in-2022-4934417
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