Housing market prices will most likely continue to drop another 10 per cent by the end of the year, according to a panel of economists and industry experts.
A report released by Finder on Monday found that 88 per cent of the 16 Canadian economists and industry experts it surveyed expect housing prices will only fall further towards the end of 2023.
Over half (55 per cent) of the panel think home costs will drop another 10 per cent by the end of the year, when compared to January prices.
In January, the Canadian Real Estate Association reported the average price of a home sold in Canada was $612,204, which marked a three per cent month-over-month decline from December.
"With pent up demand among both buyers and sellers further adjustments to prices may be required to get the market moving," Carl Gomez, chief economist and head of market analytics for CoStar Canada, said in the report.
RISE OF INSOLVENIES AMONG HOMEOWNERS
While home prices are expected to drop this year, homeowners will fall even further into debt amid elevated costs, according to the report.
All of the experts surveyed predicted insolvencies will continue to rise this year, particularly among homeowners.
Nikola Gradojevic, professor of finance at the University of Guelph, said the impact of food and energy inflation are putting residents into a tough position.
"Households and businesses have been forced to incur a lot of debt,” Gradojevic said in the report.
“It is difficult to maintain the same living standard with almost no salary increments amidst rampant inflation. Utility and grocery bills are out of control."
Higher interest rates could also have a big impact on Canadians looking to renew their mortgage this year, said Sherry Cooper, chief economist for Dominion Lending Centres, in the report.
"When variable rate mortgages renew, some households will be squeezed enough [to result in] forced selling [of their home]," she said.
The Bank of Canada’s next interest rate decision is scheduled for Wednesday.
According to economists tracked by the Bloomberg terminal, experts anticipate the Canadian central bank will hold its key policy rate at 4.50 per cent.
The report found three-quarters of the panel (75 per cent) agree the Bank of Canada’s key interest rate “should be held to allow the impact of last year's rate hikes to continue to be felt, without putting further strain on indebted Canadians by continuing to increase.”
The Finder: Bank of Canada Interest Rate Forecast report surveyed 16 Canadian economists and industry experts between February 24 and March 1, 2023. Respondents were asked about the upcoming overnight rate announcement by the Bank of Canada scheduled for March 8, 2023. The online survey allows panelists to answer or skip questions. As a result, the number of responses received may vary by question.