Market Heat Can’t Continue: Canada’s Two-Year Housing Outlook

The Conference Board of Canada, 17 pages, February 7, 2022
Issue Briefing
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This quarterly economic forecast presents the medium-term outlook for the Canadian economy. This release focuses on housing. For an overview of all major components of the economy, go to the Canadian Outlook main page.

Document Highlights

  • Canadian housing markets appear to be reheating, buoyed by favourable cyclical underpinnings and pent-up demographic demand, but this frenzy will not survive looming interest rate hikes.
  • Other potential drags on the market include a forthcoming 1.0 per cent federal tax on vacant foreign-owned homes and potential regulatory limits on housing investors.
  • Companies’ work-from-home policies boosted residential demand in smaller centres, but this looks set to moderate.
  • Canada’s average resale price rose an estimated 21.4 per cent in 2021 but will begin easing in mid-2022. By 2024, we foresee a 10 per cent decline in the country’s average resale price.
  • Canadian housing starts will ease to 235,000 units in 2022 and 221,760 starts in 2023 after hitting a 45-year high of 274,000 units in 2021.
  • Residential investment has become a large contributor to GDP; its recent pullback and its prospects for slow growth could produce significant economic drag.

Table of Contents

Key Findings
Housing Snapshot
Housing Markets Face a Cooling
Forecast Underpinnings: Interest Rates, Job Markets, and Demographics
Policy Moves
New Construction
Housing Starts
Resale Markets
Residential Investment

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