Canada Imperial Bank of Commerce has predicted a lower rate of home price growth in 2021, but whatever relief buyers enjoy will be short-lived.
In its latest forecast, CIBC said that, on average, national home prices will grow by around 2.4% in the 12 months starting October 01, which will accelerate slightly to 3% over 2022-23.
The figures have placed CIBC among the ranks of the more optimistic banks, according to real estate information portal Better Dwelling.
“The upside would see a stronger than expected economy, and a fast vaccine rollout,” Better Dwelling said. “The downside sees a worse than expected situation to unfold, likely with a delayed or ineffective vaccine rollout.”
But even the worst-case scenarios laid out by CIBC were not nearly as dire as other banks’ projections. Prices are expected to drop by 6.9% in the next 12 months should the downside forecast come to pass, and then by 0.8% in the two years hence.
CIBC’s optimism is especially apparent in the upside scenario where the economic recovery proves better than anticipated, with a home price increase of 11.2% over the next year, and another 10.4% over 2022-23.
“This is so far one of the more bullish forecasts from a bank, with their downside a little worse than National Bank’s base case,” Better Dwelling reported. “CIBC’s downside is also similar to what RBC management has stated they expect over the same period. Risk firms have forecasted much larger price declines, while the industry is forecasting much higher price growth.”