Canada Housing Research Brief
Home Sales and Prices Continue to Fall;
Multifamily Remains Well Positioned
Interest rate hikes deter prospective home buyers. The Bank of Canada increased its overnight rate by 100 basis points in mid-July to 2.5 per cent. This is the fourth rate hike this year, and they are beginning to impact the Canadian housing market. Home sales fell for the third consecutive month, with June seeing a 5 per cent month-over-month decline. As a result, prices have also started to drop. Annually, home prices are still up 15 per cent as of June, but month-over-month, prices fell 1.8 per cent. Much of these decreases were seen in areas that had the strongest gains during the pandemic, such as London, Oakville and Hamilton. Even Calgary and Edmonton have seen prices stagnate, despite a boost in Alberta’s energy-based economy. These losses stem from rising interest rates, causing mortgage payments to become less affordable. The five-year fixed mortgage rate is expected to surpass 5 per cent, and the variable rate is anticipated to exceed 4 per cent. This is pushing potential homebuyers to the sidelines and shrinking the buyer pool, while at the same time redirecting them towards the rental market.