In October, the seasonally adjusted composite index continued to trend downward for the fourth consecutive month, with a decrease of 0.8% compared to the previous month. Although significant, the correction in property prices was less significant than that observed in the previous month (-1.9%), coinciding with a stabilization in sales during the month. Since its peak in May, the composite index (not seasonally adjusted) has already contracted by 7.7%, whereas during the financial crisis of 2008, prices only fell by 6.0% over the same period and by 9.2% in total over eight months. In a context where monetary policy will continue to be tightened in the coming months, house prices should continue their contraction and exceed that experienced during the financial crisis of 2008. Indeed, we anticipate a record cumulative decline of about 15% nationally by the end of 2023, assuming a policy rate that tops out around 4.0% and a Bank of Canada that throws some weight behind lowering rates in the second half of 2023. Although corrections are being observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have recorded the sharpest declines to date. Ontario, British Columbia, and the Maritimes therefore appear to be more vulnerable, while the Prairie markets are less so, helped by a buoyant economic context.

November 2022