Canada’s housing market expected to pick up steam

Predicted rate cuts could boost real estate market, says RBC Economics.

Canada’s housing market will be “a tale of two halves” in 2024, a new report from RBC Economics has forecast. It predicted in a recent report that interest rates will remain elevated for the first few months, potentially the entire first half of 2024. Afterward, it noted that the Bank of Canada is likely to begin reducing its overnight interest rate from the current level of five per cent, leading to lower borrowing costs for mortgages.

In turn, home sales should continue to slump in the first six months, and then show growth in the second half of the year. While the rate cuts could come sooner if inflation falls closer to two per cent, RBC Economics predicted current rates may result in more homeowners experiencing renewal shock, leading to more properties going up for sale than expected.

That could boost supply slightly right before interest rates fall, easing price pressures as pent-up buyer demand spills onto the resale market.

Due to the expected tailwinds coming from easing interest rates, the report predicted that Canadian resales could grow nine per cent in 2024, reversing the trend of shrinking demand in 2022 and 2023, down about 25 and 11 per cent respectively.

Resales are expected to rise more substantially in Alberta than in British Columbia and Ontario where “crushing home ownership costs” continue to depress resales. Alberta is forecast to see sales grow nearly 14 per cent this year versus 2023, the report predicted

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