Rising interest rates hit Hamilton-Burlington house prices the most: study


Published May 25, 2023 at 3:39 pm

The Bank of Canada’s attempts to cool soaring inflation have hit the Hamilton–Burlington real estate market the hardest.

Due to rising interest rates, average home prices in the Hamilton–Burlington area plunged $191,900, or 18.09 per cent, to $868,800, according to Zoocasa’s latest analysis. That’s even more than Greater Toronto and Greater Vancouver. In the Toronto area, prices sank by $189,300, or 14.18 per cent, to $1,145,700. Greater Vancouver prices dropped by $92,800, or 7.34 per cent, to $1,170,700.

Zoocasa compared home prices across 16 major Canadian cities in 10 provinces between March 2022 and April 2023. The online real estate search platform used data from the Canadian Real Estate Association, which combined Hamilton and Burlington as one area, to learn how rising interest rates have affected prices.

The analysis found that Canada’s most expensive provinces had the biggest price declines since rate hikes began. The five major cities in Canada that experienced the biggest decreases in average home prices were in Ontario. Out of 10 provinces, Ontario’s average home price plunged the most by $174,300 (16.12 per cent). The average home price in Ontario fell to $907,200 in April 2023 from $1,081,500 in March 2022. British Columbia’s prices sunk by $113,000, or 10.51 per cent, to $961,900.

The study found that London–St. Thomas saw the greatest percentage decline of 21.51 per cent to $654,100, down $166,400.

While Hamilton and Burlington were combined in the study, Zoocasa provided inthehammer.com with separate figures for the two cities.

Hamilton’s average home price plunged by $142,340, or 15 per cent, to $806,809 in April 2023 compared to March 2022.

Burlington’s average home price plummeted by $153,647, or 11.79 per cent, to $1,149,169 in April 2023 compared to March 2022.

Canada’s four most affordable provinces see home price increases

Rate hikes have dampened the record price highs from early in the year, but prices have slowly started increasing again.

The four most affordable provinces saw prices rise since the interest rate hikes have not stung them as much, according to Zoocasa’s analysis. Newfoundland and Labrador, New Brunswick and Prince Edward Island topped the list with the highest increases in average home prices at $11,400 (4.3 per cent), $2,300 (0.83 per cent) and $1,500 (0.44 per cent), respectively.

Meanwhile, Alberta’s average home prices were relatively steady. Calgary’s home prices soared the most among 16 cities and regions by $15,100, or 2.89 per cent, to $538,200 since February 2022 thanks to the city’s surge in popularity and more affordable housing. St John’s, one of Canada’s most affordable cities, saw prices jump by $10,600, or 3.52 per cent, to $311,800. Those two cities were the only ones to see price increases in the study.

After a series of consecutive interest rate increases in 2022 and January 2023, the Bank of Canada has held its rates steady at 4.5 per cent. Its next rate decision is on June 7.

The central bank expects more households to face financial pressure as they renew mortgages, but it said in a report that most households should find higher mortgage payments “manageable.” Still, it signalled concern about financial stress for those who bought homes  between 2020 and 2022 when interest rates were almost zero.

insauga's Editorial Standards and Policies advertising