RBC doesn’t see Canada’s housing markets going into ‘free fall’

Canada’s real estate market could be more resilient than people think, says the chief financial officer of the country’s biggest bank.

Royal Bank of Canada’s Nadine Ahn described the bank’s mortgage book as healthy even as home prices buckle under the weight of higher interest rates and a possible recession. High immigration levels driving demand amid a supply crunch means the country will still be grappling with an imbalance.

“We’re actually in a situation where we don’t think the housing market is going to go into free fall because there is that tension around supply demand,” Ahn said during the RBC Capital Markets Financial Institutions Conference in New York on March 8. “And those of us who live in Toronto, we just found out house prices actually went up last month.”

Benchmark home prices in the Greater Toronto Area declined more than 17 per cent year over year in February, but the market managed its first month-over-month gain in nearly a year. After the Bank of Canada’s aggressive rate-hiking cycle last year, major housing markets such as Toronto and Vancouver suffered double-digit declines from their pandemic peaks.