Interest rate cuts should spark buying activity says RE/MAX Canada
By Steve Randall, Sep 03, 2024
There could be a boost for owners of residential real estate assets in the months ahead as lower interest rates adds fuel to the Canadian housing market.
RE/MAX Canada’s 2024 Fall Housing Market Outlook is out today (September 3) and calls for average house prices to rise between one and six percent across 76% of its broker regions surveyed, as rate cuts lead to a steady market.
However, there are some notable areas where prices are expected to be flat or even decline, such as Toronto, Hamilton, Burlington, Kitchener-Waterloo, Charlottetown, North Bay and London.
“The fall market is usually a good early indicator for activity as we look ahead to early 2025, and we’re headed toward more healthy territory. With interest rates starting to ease, buyers are beginning to come off the sidelines,” says Christopher Alexander, President, RE/MAX Canada. “That’s not to say the fall market will be in full swing according to historic standards. Consumers will drive that trend, so we’ll need to see a bigger move by the Bank of Canada for that to happen.”
Leger research for RE/MAX Canada found that 16% of respondents said they will feel confident participating in the housing market if rates have fallen by 100 basis points by the end of the year with 25% indicating that they are actively saving to buy a home in the near future, although this is well below those who are prioritizing day-to-day expenses such as utilities and food (58%), and travel (45%).
Also, 14% of poll participants said they are soon to renew their mortgage and if rates haven’t dropped enough they may have to sell their home.
And despite the overall outlook being cautiously optimistic – which has also been reflected by the Canadian Real Estate Association – affordability remains a significant challenge for individuals and the Canadian housing market.
“Despite some consumer confidence starting to return to the market this season, the reality is Canadians are still grappling with some serious housing affordability challenges rooted in lack of supply. Yes, borrowing is becoming less expensive, but this won’t make housing affordable in the long run,” said Alexander. “Markets ebb and flow, and as buyers re-enter the market and absorb inventory, we’ll see more upward pressure on price.