Interest rates will continue to dictate the outcome of Canada’s housing market in 2024 with the first and second halves showing different pictures. We expect slow activity and softer prices to persist in the early part of the year as the Bank of Canada maintains its policy rate at a two-decade high and home ownership stays out of reach for many potential buyers. But, a pivot toward rate cuts mid-year will get the wheels turning faster over the second half or perhaps even sooner. There will be a lot of pent-up demand to satisfy in the market once confidence returns, which could heat things up in a hurry. However, poor affordability conditions will restrain the recovery and make it a gradual liftoff. The larger window of opportunity for buyers is likely to open only after interest rates have dropped materially—something we foresee in the latter stages of 2024 or into 2025. That’s especially the case for first-time buyers who may be more financially constrained.
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