'Most of the city is evacuating': Gridlock on Alberta highway after evacuation order in Fort McMurray
Four Fort McMurray neighbourhoods were ordered to evacuate on Tuesday as a wildfire gets closer to the city.
A new report from TD says Canadian home sales could fall by nearly one-quarter on average this year and remain low into 2023.
The report, prepared by TD Economics and published Wednesday, says the bank has "significantly" downgraded its home sales and price forecasts compared to March "as monetary policy has tightened more acutely than anticipated."
TD Economics expects increased borrowing costs to "weigh heavily on housing activity," with the peak-to-trough decline, or the highest and lowest points in the business cycle, between the first quarters of 2022 and 2023 reaching 33 per cent.
Housing activity should begin to "firm" beyond that, the report says, but remain low as interest rates drop.
This will result in a 23 per cent annual average decline in Canadian home sales in 2022, before pulling back to an 11.9 per cent average decline in 2023.
Average home prices in Canada between the first quarters of 2022 and 2023 also should fall due to cooler demand, with TD Economics projecting a peak-to-trough decline of 19 per cent followed by modest growth.
The report comes following a series of interest rate hikes by the Bank of Canada amid record inflation.
The bank hiked its key interest rate by 50 basis points, or half a percentage point, to 1.5 per cent in June.
The bank previously raised its key interest rate in March and April, with the next rate announcement scheduled for July 13.
The TD Economics report says it expects the key interest rate to hit 3.25 per cent by the fourth quarter of this year.
Deputy governor of the Bank of Canada Paul Beaudry said last month the key interest rate could rise above the previous target of three per cent.
The TD Economics report also breaks down average annual growth and decline in home sales and prices by province, with B.C. and Ontario expected to see some of the largest decreases in 2022 and 2023, which TD Economics says is a reflection of "significant affordability deteriorations during the pandemic."
Quebec will see similar modest price growth, with sales in Alberta expected to "retrench significantly from their record highs," but remain closer to pre-pandemic levels through 2023 compared to B.C. and Ontario.
"Prices should hold up better elsewhere in Canada, with the best affordability conditions in the country cushioning other markets in the Prairies and Newfoundland and Labrador," the report says.
"Strong population growth and tight conditions should offer near-term price support to the rest of the Atlantic, although activity in this region should cool as rates ratchet higher."
A report published last month by Desjardins suggested housing prices in Canada could fall by 15 per cent to approximately $675,000 in December 2023, down from their peak of just over $790,000 on average in February 2022.
Despite this, Desjardins says $675,000 is still nearly 30 per cent higher compared to December 2019, when the average home price in Canada was $530,000.
With files from CTV News and The Canadian Press
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