Amid tighter housing rules and rising interest rates, the Canadian real estate market is facing several years of "retrenchment" and slow price gains, a new report from Moody's Analytics suggests.
However, the moderation won't be even across the country, says the author of the report.
Hamilton, Oshawa, Toronto buck the trend
Ontario metropolitan areas will buck the trend, thanks to imbalances in several regions, with the price of single-family homes in Toronto expected to grow by average annualized rate of 7.7 per cent. Areas around Toronto are also expected to show prices gains over the same five-year period, with Oshawa to follow close behind Toronto at 7.5 per cent, while Hamilton is forecast to see 5.8 per cent annualized growth.
Vancouver, which along with the Greater Toronto Area has been responsible for much of the froth in the housing market, is forecast to see roughly level house prices over the next half decade.
Among other metro areas, Montreal house prices are forecast to decline by an annualized rate of 0.6 per cent over five years, while Calgary is expected to see an average annual decline of 1.1 per cent.
At the bottom end are expected to be Thunder Bay, projected to see a rate of decline of 5.4 per cent, and St. John's, which is forecast to see a rate of decline of 6.1 per cent. Carbacho-Burgos cited falling median income combined with slow-to-negative population growth and household formation for the expected drops in those two cities.
Last week, the Bank of Canada boosted a key interest rate for the second time this year, leading Canada's big banks to bump up their prime rates, which means rising interest rates for people on variable mortgages. Some observers have also suggested the central bank may not be finished hiking rates this year, with some pointing to a possible rate hike in October.