Economists project ‘turning point’ in Canadian housing market

Economists believe the Canadian housing market could see a rebound in 2024 after a year of caution sparked by rising borrowing costs.

The projection is largely dependent on forecasts from the Bank of Canada, which have the central bank potentially beginning to cut its key interest rate as soon as the second quarter of the year.

“We’re obviously watching for a turning point in the market,” said TD Bank economist Rishi Sondhi.

“We’ve had some, I would say, weaker sales and price activity over the past few months … We’re getting some indications that the market, at least from a demand perspective, is starting to turn around.”

READ MORE: Bank of Canada holds key interest rate steady at 5%

The latest national home sales and pricing report from the Canadian Real Estate Association described softer market conditions since the end of last summer, with sellers joining potential buyers on the sidelines.

Falling prices have primarily been concentrated in Ontario, with some provinces seeing prices holding firm or continuing to climb even higher.

“I wouldn’t expect anything too headline-grabbing from the resale housing market for the next few months,” noted CREA chair Larry Cerqua in December.

“That’s a good thing, because a market that looks to be stabilizing in balanced territory increasingly suggests the soft-landing scenario.”

WATCH MORE: Vrancor’s affordable housing project proposed in Hamilton on pause

The Bank of Canada has held rates steady over three round of decisions, but the bank has said it may still raise rates despite forecasters largely predicting the next move to be a cut.

Sondhi acknowledged that risk, should inflation remain “more stubbornly elevated than anticipated” in the coming months.

“Then the bank might be forced to, at the very least, maintain a higher-for-longer stance,” he said.

This report was created with files from The Canadian Press 

READ MORE: Liberal government to announce ‘renewed’ housing plan in 2024