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Moody's Analytics national housing market outlook predicts a nine per cent decline in Toronto
Home prices across Canada will drop seven per cent in 2021 due to higher unemployment and lower incomes, according to a forecast published by Moody’s Analytics on Wednesday.
Economist Abhilasha Singh predicted a 6.7 per cent decrease for detached single family house prices, and 6.5 per cent for condo apartments in 2021.
The housing price decline will look different regionally depending on independent factors, Singh said. She noted that there is a “dangerous” excess supply of new single-family homes in Calgary and Edmonton. Coupled with a hit to the oil industry in Alberta, the report predicts the two regions will suffer from a peak-to-trough decline of 10 per cent.
Regina is close behind at nine per cent, with Toronto forecasted to reach an almost nine per cent decrease as well. Vancouver and Montreal home prices are expected to drop a little less than seven per cent, and Ottawa comes out on top with only a thre per cent predicted decrease.
“The housing market will no longer be able to escape the poor condition of the labor market as vacancy and delinquency rates rise in 2021,” Singh wrote in the report.
She said the pandemic’s downward impact on employment and income will slow buyers’ return to the market, as will “affordability issues” in Toronto and Vancouver.
“Rental vacancy rates will rise in Toronto and Vancouver as an increased supply of rental units coincides with a fall in demand due to disruption of migration to Canada,” she wrote. “Not even lower interest rates will be enough to save the housing market.”
The predictions from Moody’s report follow data released from the Canadian Real Estate Association that home sales in Canada rose over six per cent month over month in August.
The report also predicted other trends in demand for different properties due to COVID-19, including ones offering more space for working from home without as many shared spaces with neighbours.
“While demand for single-family homes with ample space and large pantries may rise, so too might demand for smaller apartments and condos given the struggle many families will face in saving for a down payment,” the report stated.
Ultimately, Singh says the pandemic will result in “even further widening in economic inequality,” including housing.