The Canada Mortgage and Housing Corporation (CMHC) predicts that residential real estate prices could reach record levels recorded in early 2022 by next year and new highs by 2026.
The agency’s latest Housing Market Outlook report also indicates that Canadian housing starts are expected to decline this year before recovering in 2025 and 2026, reflecting the lagged effect of rising interest rates on new constructions.
According to a report released last week by the agency, 137,915 new housing starts were started last year in Canada’s six largest cities, with levels remaining consistent with the past three years due to a sharp increase in the number of new apartments.
However, despite the increase in the number of rental units coming onto the market in 2023, supply is not expected to keep up with demand, leading to higher rents and lower vacancy rates in the years to come.
CMHC says affordability in the homeownership market will also be a concern over the next three years, as falling mortgage rates and the strongest population growth since the 1950s are expected to lead to a recovery in sales and housing prices.
The study predicts that sales levels between 2025 and 2026 will slightly exceed the average of the last ten years, but will remain below the record levels recorded between 2020 and 2021, due to the continued high cost of housing.
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