The real estate industry of Canada is going through a change in the recent days. As per the current updates, the home prices will be dropped by 10%. In the time of ‘sudden surge’ in the supply of the real estate industry, the home prices are going down.

Recently, TD Bank has also confirmed that the price will be dropped from the third-quarter level to the beginning of next year. This huge amount of price drop has surprised everyone. Now the economists have said ‘Ontario’s sales-to-new listings ratio has plunged to 39 per cent in October from 63 per cent in May. A sudden surge in supply is largely behind the deterioration in the ratio, abetted by a more prolonged drop in sales’.

Along with that, they have also said ‘However, some perspective is warranted. A 10 per cent decline in average home prices would still leave them 15 per cent higher than pre-pandemic levels. Our expectation that the Bank of Canada will be cutting rates towards the end of the second quarter of next year prevents a steeper decline’.

TD Bank came up with the update after Canadian Real Estate Association (CREA) stated that there is a ‘sizeable decline’ seen in the housing market of Canada. The average price of a home in Canada was $656,625 in October. But according to the report, the sales have decreased by 5.6 per cent in the last month.

Along with that, the senior economist of CREA have said that the housing demand in the country is ‘extremely high’. Along with that, he has also said ‘It will really come down to whether the Bank of Canada has to increase interest rates again, or whether by next March it’s simply a matter of how soon we’ll see the Bank make its first cut’.

In the meanwhile, the Bank of Canada Governor, Tiff Macklem has stated that the ‘excess demand’ has made a huge impact on inflation and to the economy of the country. But according to the report, the inflation has slowed down a little bit and it is at 3.1 per cent in October. At the previous month it was at 3.8 per cent and in June 2022, it was at 8.1 per cent.

The Bank of Canada took initiative to control the inflation by raising the benchmark of the interest rate. They have done this to decrease the inflation level in the country. Therefore, now it can be said that has given a positive result.

The economist of TD Bank has stated a few things on this topic. He has said ‘The potential for weaker growth or higher-than-expected interest rates are important downside risks to the outlook. On the upside, there’s the possibility that the 16 per cent jump in new listings observed in Q3 unwinds by more than what’s built into our forecast’.

In addition to that, he has also said ‘In a scenario where new listings post a small decline through the first half of next year (compared to the modest gain we expect), Canadian average home prices would still fall, but the decline is about one percentage point shallower’.