After more than two years of frenzied sales and overbidding, the real estate market has finally come into its own. So we wonder what 2023 will bring. If you're thinking of buying a property this year, here are five things to keep in mind.
A drop in prices on the horizon
After spectacular price increases of almost 20% per year in Quebec in 2020-2021, the last few months of 2022 were marked by a sharp slowdown: sales slowed down (-13.04% in 2022 according to Desjardins) and prices stopped increasing at a crazy pace. According to Philippe Lecoq, President of Proprio Direct, prices can be expected to stabilize in 2023 across the province.
"The Canadian Real Estate Association (CREA) expects the average property price to increase by 0.5% in 2023. We were in a seller's market and we're moving towards a balanced market with more properties for sale and less demand than in previous years," he explains.
In Montreal, we could even see a decrease. In fact, in its latest report, the Royal LePage firm predicts that "in the Greater Montreal area, the aggregate price of properties in the fourth quarter of 2023 should decrease by 2.0% compared to the fourth quarter of 2022, reaching $532,238".
Bye-bye to overbidding
According to the experts, the phenomenon of overbidding, which has become very common since 2020, should become very marginal, if not disappear. In the Greater Montreal area, the trend had reached a peak in the spring of 2022," recalls Hélène Bégin, senior economist at Desjardins. No less than 30% of properties were sold at a price at least 10% higher than the posted price.
"In October, according to CREA, less than 5% of properties were sold at an overbid. As the market has slowed down, this practice has almost disappeared and should not be seen much more in 2023," she says.
What about mortgage rates?
This is THE question that everyone is asking with a touch of concern. After successive increases throughout the year, mortgage rates will remain high in 2023, even if they should eventually stabilise and then fall.
"We expect mortgage rates to rise until about mid-2023 and then, when the inflationary context is better controlled, we could see slight gradual decreases in the second half of 2023 and in 2024," explains Francis Cortellino, an economist at the Canada Mortgage and Housing Corporation (CMHC). However, the expert does not expect to see rates comparable to those observed before 2022 in the near future.
Not easy for first-time buyers
In this context where rates are "the highest since the last recession in 2008", as Hélène Bégin points out, access to property will not improve much in 2023. "It will particularly affect first-time buyers who don't have a large down payment," she says.
Francis Cortellino shares this view. "Even if prices fall, mortgage rates will not improve affordability. It will still be an issue for many people and that will mean that the number of property sales will continue to fall this year," he adds.
New builds lag behind
For those looking to buy new, there will be fewer options. Indeed, the number of housing starts will fall back to a similar level to 2019. There will be less new construction," notes Hélène Bégin. Housing starts had already fallen by 10% in 2022 and should fall by a further 20% in 2023. The new housing market will therefore be less dynamic than in the last two years.
Source : Article by Zoé Magalhaes on the journalmetro.com on the 2nd january of 2023
Link : https://journalmetro.com/inspiration/2975511/immobilier-5-choses-a-savoir-avant-dacheter-en-2023/
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