Canada Mortgage and Housing Corp. expects a drop in home prices in the country’s biggest cities amid “severe declines” in home sales and construction.
The federal housing agency says a combination of factors related to the pandemic, such as higher unemployment and lower income, will slow housing starts and push sales and home prices below pre-Covid levels.
CMHC says the market likely won’t see a return to pre-pandemic levels before the end of 2022.
Average home prices in Toronto, Montreal and Ottawa are expected to rebound sooner, starting in late 2020 and rolling into early 2021.
Prices in Vancouver, Edmonton and Calgary likely won’t rebound until later in the forecast period, it added.
Calgary and Edmonton will see average home prices decline, it said, due to uncertainty around oil prices and economic recovery in the region.
CMHC deputy chief economist Aled ab Iorwerth says Covid had “unprecedented impacts” on the country’s urban centres.
“Short-term uncertainty will lead to severe declines in sales activity and in new construction,” he said in a statement.
“As the virus is overcome, cities will bounce back but there is significant uncertainty with respect to the path and timing of the recovery.”