Lower interest rates might not be enough to prevent the possible decline of housing activity and value in the next few months, according to a recent analysis by Moody’s.
In its latest “Canada Housing Outlook” document, Moody’s predicted that during the second quarter, national GDP would fall by 15% and unemployment would swell to 10%.
With purchasing power already suffering significant declines amid the coronavirus outbreak, these trends represent more tough times ahead for the market, Business in Vancouver reported.
“The COVID-19 pandemic along with the collapse in oil prices will create a perfect storm this year for both home sales and residential construction,” said Moody’s economist Abhilasha Singh.
As a result, housing starts will likely plunge to 145,000 annualized units by year-end, far below the rosy early-2020 projections of 210,000 units.
“Not even lower interest rates will be enough to save the housing market,” Singh said, forecasting that housing prices will decline by roughly 10%.
“The worst effects will be felt in regions that rely disproportionately on the leisure/hospitality, trade and energy industries,” the Moody’s report said. British Columbia and the Prairie provinces, in particular, will bear the full brunt of this market sluggishness.