Housing prices in Canada have soared drastically since pre-pandemic levels. According to the latest CPI, housing prices have increased by 25.7 percent over the past three years. This is largely due to more Canadians wishing to move to suburban areas in a desire for more living space, as many began to work from home regularly. As such, whereas suburban homes were typically cheaper than homes in city centres before the pandemic, this shift in mindset increased housing prices in all areas across the country. As a result of increasing house prices, homeownership has largely decreased across the country. According to Statistics Canada, the proportion of Canadians who own their own home is at its lowest percentage since 2011, when homeownership in the country was at its peak.
Coupled with rising housing costs, the average Canadian is paying 9.3 percent more in rent compared to pre-pandemic levels. This number has consistently grown in the past three years as the number of Canadians choosing to rent has grown exponentially.
Statistics Canada recently reported that the number of Canadians renting their homes far outpaced the number of new homeowner households. The surge in rental prices has largely been due to a decrease in the supply of rental units. This surge is also coupled with a stark increase in new house prices and bank mortgage interest rates. As demand for rental properties has increased, the decline in available properties has meant a tighter rental market which allows renters to increase their prices.
(Click on any of the three provinces to isolate the rent costs and housing prices in that region. Click on the blank space anywhere in the map to reset. )
(The statistics for Housing prices across Canada only listed Canada’s three major provinces and housing markets, while all other provinces were grouped into either “Prairie Region” or Atlantic Region. The Canadian Price Index, or CPI, which listed Canadians’ average spending on rent, listed the averages for every province.)
By July 2023, the housing market began to see a new trend. For the first time since the onset of the COVID-19 pandemic, housing prices consistently fell on a month-to-month basis into the new year. TD Bank believes that this trend will lead to the housing market bottoming out in 2023 as prices continue to trend downward.
A major factor for this trend has been the Bank of Canada’s rising interest rates, especially when concerning lending rates. The price decline has seen a slight increase in home sales, though TD Bank reports that consistent rates of new homeowners have not been this low since 2003.
Outside factors have also contributed to a lower rate of new home ownership. These include lower consumers due to the ever-changing nature of the COVID-19 pandemic affecting confidence when it comes to making large purchases. The lowering cost of new houses is expected to increase rates of homeownership in late 2023, as Bank of Canada interest rates are expected to lower to previous averages. It will be interesting to monitor if these factors will eventually contribute to a growth in housing prices.
