CMHC: Canadian Home Prices Predicted to Reach New High by 2026
2 min read.
The Canada Mortgage and Housing Corp. (CMHC) has released a forecast indicating a significant spike in Canadian home prices in the coming years. According to their projections, these prices could match the peak levels observed in early 2022 by the following year and surpass them by 2026. Despite an increase in rental housing entering the market in 2023, CMHC warns of a looming supply-demand imbalance that could lead to escalating rents and tighter vacancy rates in the foreseeable future.
Bob Dugan, Chief Economist at CMHC, emphasized several key factors contributing to this trend: "We anticipate that by 2025-2026, lower interest rates, continued government support, and policies encouraging greater density in urban centres should make more projects viable."
The agency also highlighted looming affordability challenges in the housing market over the next three years. With mortgage rates on the decline and Canada experiencing its most robust population growth since the 1950s, CMHC anticipates a resurgence in both home sales and prices. Dugan mentions, "As mortgage rates decrease and economic uncertainties subside in the latter half of 2024, we anticipate a renewed influx of buyers into the market." This resurgence is anticipated to be fueled by a shift in demand towards more affordable housing options across Canada.
While CMHC projects sales activity from 2025 to 2026 to slightly surpass the 10-year average, it predicts that levels will remain below the record highs observed in 2020 and 2021, primarily due to high housing costs. Additionally, the agency forecasts a dip in housing starts this year, followed by a recovery in 2025 and 2026, reflecting the delayed impact of higher interest rates on new construction.
CMHC's forecast suggests a dynamic and evolving landscape in the Canadian housing market, with significant implications for homeowners, renters, and policymakers alike. As these projections unfold, stakeholders must closely monitor developments and adapt their strategies to navigate the changing market conditions.
References
Hudes, S. (2024, April 4). Home prices could reach peak levels by next year, set new highs in 2026: CMHC report. CP24. https://www.cp24.com/news/home-prices-could-reach-peak-levels-by-next-year-set-new-highs-in-2026-cmhc-report-1.6833958
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