Prices for Real Estate Predicted to Rise Next Year
One of the notable effects of the Covid-19 pandemic is that it has significantly boosted the real estate field, with mortgage rates reaching an all-time low to encourage house buying during the pandemic. This has offered new opportunities for young, first-time buyers to get onto the housing ladder; however, prices have been increasing. With this in mind, it’s important to consider how the real estate market is likely to change in the coming year.
Generally speaking, it is expected the real estate market will continue to grow and increase, and the number of home sales has been predicted to grow by 6.6%. What’s more, it’s worth considering that the prices for real estate will continue to rise slightly, with predicted increases of 2.9% for 2022.
One of the significant drivers of increasing demand for real estate purchases is the expected rent increases, which are predicted to increase by a staggering 7.1% for 2022 – something that will undeniably incentivize first-time buyers to invest in real estate. However, with incomes only predicted to grow by 3.3%, this will leave a shortfall between the differences, which may naturally make saving up for a first deposit much harder for first-time house buyers just getting onto the property ladder.
Of course, with the aforementioned rent and price increases that we’ve mentioned, as well as the increase in demand for real estate purchases from first-time buyers looking to escape rent increases, the appeal of lower-priced properties will likely be increasingly great. What’s more, this is likely to be supported by the new remote-working opportunities that many employers are now offering. As such, properties in the suburbs or metro regions will likely see the greatest demand growth, while more expensive properties in prime locations may see slower demand growth overall for their higher prices.
In short, demand for greater property affordability has been seen on a national level throughout the pandemic; hence, the Bank of Canada has frozen the mortgage rates until the Spring 2022 review to encourage investment in real estate. Nevertheless, affordability will likely remain a key issue for many homebuyers. Single-family homes, apartments, and properties in less in-demand regions are predicted to be in the highest demand as a result. Rent control policies may also be implemented to curb the drastically rising costs of rent. Meanwhile, homes with higher price tags may struggle more to find buyers, particularly since location is less of an influence for job positions these days thanks to widespread remote working.