Canada’s housing market headed for another record year in 2021
Canada’s housing market may be heading for a soft landing at the end of the year after what could be a record-breaking 2021, a new report by RBC Economics said. The report published Wednesday said “supercharged” demand driven in part by low rates, high household savings and improving consumer confidence will continue to push housing market activity in Canada to record highs.
The pandemic changed some dynamics—it drove many buyers to the suburbs, exurbs and beyond, ground immigration to virtual halt, triggered a downturn in big cities’ rental markets and caused households to build up their savings—but it didn’t dial down the market’s heat. We expect this to largely continue in 2021.
The increase is set to take place after a 2020 that was likely the strongest year ever for the market despite the COVID-19 pandemic stalling activity in the spring. In the report, RBC Senior Economist Robert Hogue estimated that home resale activity will reach 588,300 units in 2021, up from 552,300 units in 2020. The national benchmark price will rise 8.4 per cent to $669,000, driven mainly by low supply, Hogue wrote. But signs of a cooling down will also start to emerge at the end of the year, he said.
“Call it a 2022 soft landing,” Hogue wrote, leaving open the possibility of a worse slowdown should the pandemic remain a threat to the Canadian economy despite large-scale vaccine distribution. RBC forecasted seasonally adjusted and annualized resales will be down from the December 2020 peak of almost 700,000 units to a “still solid”515,000 units by the end of 2021.
Not only did home price increases stay on track throughout the pandemic, the pace quickened. The aggregate benchmark price increased 8.5% in Canada in 2020, or almost five times the rate of 1.8% in 2019, according to the report.
“We see price support softening gradually over the course of the year, though, setting the stage for a more modest 3.9% appreciation in 2022,” Robert Hogue wrote.