Higher lending rates by the Bank of Canada are causing homes to become more unaffordable despite a drop in prices, a trend that may continue until housing markets reach a new balance in 2023.
Interest rate hikes that began in March led house prices to drop for five consecutive months, according to Teranet’s National Composite House Price Index. The index, done in partnership with National Bank of Canada, fell a record 3.1 percent from August to September, breaking the previous record drop the previous month of 2.4 percent.
Robert Hogue, assistant chief economist at Royal Bank of Canada, says the falling price of housing is not surprising, as “home resale activity had reached sky-high levels” following the pandemic, and then dropped as the central bank raised its lending rates….