Desjardins expects real estate market prices to fall in the coming months.
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This decline, expected in markets where there is overbidding, might reach 12%.
“Prices have increased enormously and we have an increase in interest rates. This means that affordability is seriously degraded, our indices clearly show this. This makes it extremely difficult for first-time buyers to access property,” explains Desjardins Group chief economist Jimmy Jean.
Since first-time buyers account for approximately 50% of market transactions, demand is likely to decline as this category will not be able to purchase a home.
“It will affect prices,” said Mr. Jean, who believes, however, that this drop will not return to pre-pandemic prices.
Jimmy Jean maintains that some borrowers who have variable rate mortgages are also likely to experience certain difficulties with the increase in interest rates, but that this situation will not be generalized.
“The most important aspect in all of this is the job market. We are in a labor shortage situation. In Quebec, revenues are increasing by 5.7% in annual variation, so revenues are there, ”underlines Jimmy Jean.
*Watch the full interview in the video above*
