Canadian Real estate was significantly affected by Covid-19 in 2020. All provinces in Canada have an impact of Covid on real estate. Markets slowed down in the early months due to the pandemic as the real estate and housebuyers were uncertain about the economic downturn’s impact on the real estate market.
But in the later months, the market gradually picked up with low interest and high demand, which drove the sales.
Making an accurate forecast about the real estate market in Ontario is difficult. The real estate market is influenced by several factors: government policies, interest rates, and economic conditions.
In 2022, Real Estate was not as strong as it was in 2021. house prices were at their peak in 2021.
In 2022, with the higher interest rates, there was a downfall in selling new houses. This was the reason the housing market in Ontario has seen a decline due to the high-interest rates by the Bank of Canada.
The average house price in the Greater Toronto Area in 2021 was $1,159,763, which dropped 5% to the average price of $1,098,502 a year later in October 2022.
Similarly, in November, the price drop was by 7%. This was due to the rising interest rates, which are difficult to afford.
RE/MAX experts suggest that average residential sale prices in Oakville and Muskoka, Ontario, are likely to remain steady or decrease between 2 to 10% in the fall months. The forecast predicts that the Greater Toronto housing market will regain balance in 2023, although the low inventory is continuing upward pressure on prices.
In November 2022, the housing market continued to be driven by the influence of rising interest rates on affordability. Following the pattern that developed since the beginning of interest rate hikes in the spring, sales were significantly lower compared to last year’s period.
The house prices and selling house numbers have remained low in the past year since August. The average selling price was between $1.08 and $1.09 million. 4,544 sales were reported by Greater Toronto Area (GTA) REALTORS® in November 2022.
The number of new listings (8,880) decreased both year-over-year and month-over-month. In November 2022, Home Price Index Composite Benchmark was down by 5.5% year-over-year. This included detached and semi-detached houses.
In 2023, the average housing price in the Greater Toronto Area is expected to decrease by about 12%. And a decline of 3.3% in the whole country. This decline is amid the rising interest rates and impending recession.
The real estate market is not expected to crash in the next five years. But 2023 is expected to mark the weakest sales year since 2001. But it is expected that the Canadian housing sales growth and average home prices will return to a positive annual base in 2024.
The bank of Canada is expected to move rates from the restrictive territory while the economy should be healed from its weak condition in 2023. The population growth is expected to fill the gap in demand, which will also increase the demand for new houses, strengthening sales activities.
With the increase in demand, the real estate market is expected to grow in price. But there will be limiting factors too.
The affordability conditions are expected to be stricter in Ontario. Many experts have also forecasted that 2025 will favour buyers.
With the increase in interest from the Bank of Canada, house prices started to plummet at the end of 2022. This will continue in 2023, and the market is expected to regain balance in 2024.
But according to some experts, the housing market will see a downfall of 2-5% in 2024 and regain balance in 2025. This will remain in a balanced condition in 2026. Also, the increased population will increase the demand for new housing, including detached and semi-detached houses.
The housing requirement changes from person to person. For old, need a house which is easily accessible, and the younger generation needs housing which is big and accommodates their family requirements.
In all, for the next five years, the Real Estate market in Ontario will be expected to be a balanced market in the future.
- Real Estate has seen a downfall since November 2022.
- The prices of houses in Ontario are also expected to fall in 2023.
- It is expected to have difficulty in affordability till the end of 2023.
- Real Estate in Ontario is expected to regain balance in mid-2024.
- In the next five years, the Real Estate market is expected to become balanced.