The looming question of whether the Bank of Canada will further increase interest rates later this month has caused trepidation among B.C. homebuyers, resulting in a noticeable slowdown in the housing market. Recent data and expert opinions suggest that rising interest rates have made a significant impact on housing trends.
Royal LePage Adjusts Predictions
Leading real estate company, Royal LePage, has made downward adjustments to its year-end forecast. Initially predicting an 8.5 per cent year-over-year increase in the national aggregate price of a home for the fourth quarter, the company has now revised it to 7.0 per cent.
Phil Soper, the president and CEO of Royal LePage, shared insights on the revision. “We don’t anticipate a material change in property prices through the remainder of the year,” he stated. He also pointed out the possibility of change depending on the actions of the Bank of Canada concerning interest rates.
“Once interest rates begin to ease, even by only a small amount, we expect buyers will return to the market in large numbers and the relentless upward march of home prices will begin again. At its root, housing supply remains out of step with the growing need for it,” Soper added.
BCREA Reports Sluggish Numbers
The BC Real Estate Association (BCREA) released its figures for September, which further underscore the apprehension in the housing market.
Brendon Ogmundson, the Chief Economist at BCREA, commented on the recent trend: “Home sales in B.C. have clearly been impacted by the Bank of Canada’s recent tightening of interest rates, along with the resulting surge in mortgage rates.” Ogmundson highlighted the challenges faced by potential buyers, “Home sales are once again trending at below average levels as potential buyers struggle with a high cost of borrowing.”
Bank of Canada’s Decision Looms
After two hikes during the summer, the Bank of Canada decided to hold its key overnight rate at 5.0 per cent in September. The nation now eagerly awaits the central bank’s next interest rate announcement slated for Oct. 25.
The forthcoming decision on lending rates is heavily influenced by inflation figures. If inflation numbers, due out next week, show an increase for September, it could signal another interest rate hike.