Real estate numbness set to continue in 2023, study finds
Sales of existing properties will decrease by 25% in 2023, according to a real estate market study produced by Desjardins.
The scarcity of housing available for rent, high rents, but also rising mortgage rates, among other consequences of inflation, are putting pressure on the real estate market, which should grow in 2023, according to a study published Thursday by Desjardins Group.
Sales of existing properties will decrease by 25% in 2023, establishes a report produced by two economists, Hélène Bégin and Maëlle Boulais-PRésault. They thus estimate that the decline will be similar to that of 2022 and that it will be necessary to wait until 2024 for the situation to improve.
At the same time, the fall in the average price , which has already stood at 8.1% in Quebec since the April 2022 peak, should reach 17% by the end of 2023, the two economists also predict.
In the inflationary context, aspiring buyers are struggling to finance their first real estate project, noted Ms. Bégin in an interview on the show Midi Info. As for local or international investors, who accounted for about 20% of property sales in the country before the rise in interest rates, they are also less active, the report notes.
New housing construction, which fell by 15.8% in 2022, is also expected to decline by around 20% during 2023, according to economic forecasts.
The shrinkage of the rental market is explained in particular by the demand linked to the resumption of immigration after the health restrictions of the pandemic, specifies Ms. Bégin, but also by the fact that senior tenants of age to move into adapted residences prefer to stay in their homes, she adds.
However, the tighter the rental market, the more it exerts upward pressure on the rent, says Hélène Bégin, citing data from the Canada Mortgage and Housing Corporation (CMHC): across Quebec, samples show that the price of housing has increased by 9% between 2021 and 2022. This increase should reach 10% in 2023, according to Ms. Bégin.
Construction should be accelerated to have more choice on the market, but with the rise in interest rates, it is the opposite [which occurs], observes Hélène Bégin at the microphone of the show Noon Info.
“It will take a boost in government programs to allow builders/developers to continue the construction of rental housing […] Construction decreases when it should accelerate. »
— Hélène Bégin, Senior Economist at Desjardins
The horizon should brighten in 2024 with the anticipated drop in mortgage interest rates, which which will make real estate more affordable and come with a boost in property sales, the report anticipates.
Economists even predict a slow rise in prices during 2024. New construction should also pick up, according to them.