Canada home prices to drop 12% in 2023, still unaffordable for many

BENGALURU — The drop in home prices in Canada this year will be steeper than forecast three months ago but mild compared with an historic run-up during the COVID pandemic, leaving many first-time buyers still priced out of the market, a Reuters poll showed.

Following nearly a year of mostly aggressive interest rate rises from near-zero that the Bank of Canada has only recently set on pause at 4.50%, mortgage rates have soared over 170 basis points, restricting activity in the once red-hot market.

Average home prices in Canada have already fallen roughly 15.0% from their early 2022 peak and are forecast to drop 12.0% this year, according to the median view from a Feb 15-28 poll of 13 housing experts.

That is slightly more severe than the 10.0% fall predicted in a November survey.

But that expected decline is dwarfed by the more than 50% rise during the height of the pandemic, and is a very small fraction of prices that roughly tripled over the past two decades, suggesting the dream of owning a home will remain out of reach for many prospective first time buyers.