According to the scenarios developed by the PBO, house prices might fall 12 to 23% by the end of the year compared to the highs reached earlier this year. (Photo: 123RF)
Ottawa — The Parliamentary Budget Officer says the national average price of a property in February was more than 50 per cent higher than it was two years ago, before the pandemic.
In a new report, released Thursday, the Parliamentary Budget Officer (PBO) indicates that the national average price of properties in Canada has risen from $551,100 in February 2020 to a peak of $839,600 in February 2022 – an increase of 52% in two years.
Average property prices in Montreal and Quebec peaked in May 2022, slightly later than in most other major centers across the country.
The PBO also points out that since February, the average price has fallen by 7%, going to $777,200 last August, “parallel to the sharp increase in mortgage rates”. The average price had fallen in August by 3% in Montreal and 4% in Quebec compared to the peaks.
Using a methodology developed at the International Monetary Fund (IMF), which examines the borrowing capacity of households and the ability to buy property in certain census metropolitan areas, including Quebec and Montreal, the PBO says that the average home price in August was 67% above what is considered an affordable level — “what an average household might afford under normal use of their borrowing capacity.”
Average property prices in Montreal, Ottawa, Hamilton, Toronto, Halifax, Victoria and Vancouver were more than 50 per cent above “affordable levels” in August, the PBO report said.
Parliamentary Budget Officer Yves Giroux credits higher mortgage rates for increasing the gap between average property prices and what the average household can afford.
According to the scenarios developed by the PBO, house prices might fall 12 to 23% by the end of the year compared to the highs reached earlier this year. In Montreal and Quebec, this drop might be between 8% and 25%, according to the PBO’s scenarios.
“However, our scenarios are given for information only and should not be considered as forecasts of falling property prices,” warns the PBO.