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Big lenders banking on hot housing market in 2022

January 5, 2022

The majority of Canada’s biggest mortgage lenders are forecasting a robust housing market this year, with some seeing double-digit sale increases and sharp price hikes, despite rising lending rates and a shortage of homes for sale.
CIBC, however, believes detached house sales will decline, though condo prices will rise.
The outlook from the Big Six banks parallels that of the Canadian Real Estate Association, which expects 2022 home sales to increased 8.6 per cent compared to last year, with prices rising 7.6 per cent.
The bank forecasts, however, are shadowed by the fact that their analysts expect the Bank of Canada overnight lending rate to increase by about 1 per cent by the end of 2022, in a series of hikes.
Here is what the biggest lenders see for this year’s housing market:
The Royal Bank of Canada expects 2022 home sales to increase 19.8 per cent from a year earlier, with the average home price increasing 3.3 per cent. “We expect extremely tight demand-supply conditions will keep prices under intense upward pressure in the near term though we see such pressure easing significantly by the second half of 2022 as markets achieve a better balance.”
The Toronto Dominion Bank is forecasting a 7 per cent increase in home prices this year and suggests “another strong year for price growth is in the cards for 2022.”
The Canadian Imperial Bank of Commerce is the outlier, cautioning that home sales could plunge in 2022 and condos may be the only sector to see price growth. “Overall, we expect sales to fall by 15 per cent in 2022, relative to the elevated level seen in 2021—an environment that is consistent with a notable deceleration in home price inflation next year,” wrote economist Benjamin Tal. “This environment is also likely to impact the relative value of condos vs. single-detached unit. Logic suggests that higher rates will channel more activity into the more affordable condo market, resulting in relative price outperformance in that market.”


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