Canada’s housing markets are still expected to feel the impacts of the COVID-19 pandemic until 2022, due to the significant impact on house building, sales, and prices.
On Wednesday, Canada Mortgage and Housing Corporation (CMHC) released a forecast on national housing market activity for 2020 and 2021.
“Following large declines in 2020, housing starts, sales, and prices are expected to start to recover by mid-2021 as pandemic containment measures are lifted and economic conditions gradually improve,” Bob Dugan, CMHC’s chief economist, said.
“Sales and prices are likely to remain below their pre-COVID-19 levels by the end of our forecast horizon in 2022. The precise timing and speed of the recovery is highly uncertain because the virus’s future path is not yet known.”
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The CMHC’s forecast shows that house prices could fall by as much as 9% to 18% from their first quarter 2020 levels before beginning to recover in 2021.
“Our forecast reflects different potential outcomes for price growth that could see home prices return to their pre-COVID-19 levels by the end of the 2022,” the report said.
There are also regional disparities in economic conditions lead to varying impacts on house prices.
For example, in oil-producing Alberta and Saskatchewan, housing prices could experience close to 25% declines from pre-pandemic levels.
In addition, the restrictions on construction activity are leading to a “sharp decline” in housing starts.
This means that housing starts could decline by as much as 75% from the first quarter 2020 level before starting to recover by the second half of 2021.
And, home sales in Canada could experience as much as a 29% decline from pre-coronavirus levels before slowly recovering post-2022.
According to the report, the pandemic has caused “severe disruptions” to the economy placing “unprecedented pressures” on employment, incomes, migration, and financial markets, which were all factored in when forecasting the trajectory of the Canadian housing market.