The Canadian housing market has seen some significant developments recently, especially in terms of affordability and government policy changes. These shifts are expected to influence buyer behavior and could lead to changes in home prices by the end of 2024.
One of the most notable changes is the Bank of Canada's decision to reduce the overnight rate to 4.25% on September 4th. This is expected to be followed by another 0.5% cut on October 23rd, a move aimed at easing the burden on borrowers. In tandem with this, fixed-rate mortgages have now dropped as low as 3.99%, offering much-needed relief for prospective buyers.
Another impactful announcement came from the federal government, which will allow homebuyers to put as little as 10% down on homes priced up to $1.5 million, starting December 15th. This policy change could significantly expand access to homes that were previously unattainable for many buyers, potentially increasing demand in higher price ranges.
These financial shifts have already begun to influence buyer confidence, with many anticipating that home prices will stabilize toward the end of the year. However, the market’s current behavior presents a mixed picture.
In Oakville, detached home prices continued to decline, with a 1.2% decrease in September and a year-over-year drop of 3.8%. Despite this, the townhome market shows signs of resilience, with prices increasing by 0.3% month-over-month. This uptick can be attributed to first-time buyers looking to capitalize on the new policies and secure properties before the market shifts further. Nevertheless, absorption rates for both detached homes and townhomes remain below 20%, indicating that Oakville is still in a buyer's market. Home prices are unlikely to see significant gains until absorption rates rise to the 30-60% range, suggesting an improvement in demand relative to available inventory.
The apartment market in Oakville, on the other hand, remains under pressure. Prices dropped by 0.9% in September and are down 6.2% year-over-year. With an absorption rate of just 11%, well below the 30% threshold for a balanced market, the oversupply of apartments continues to weigh on values in this segment.
Looking forward, market sentiment is clearly shifting. Expectations of further interest rate reductions and the upcoming down payment rule are likely to push prices higher as we approach the new year. If buyers rush to secure homes before these changes fully take effect, we may even see prices rise ahead of schedule.
In the meantime, those considering entering the market should stay informed as conditions continue to evolve. These recent announcements could create opportunities for both buyers and sellers, especially as the broader market moves toward a new equilibrium.
