The Canadian real estate market has been the driving force to the increase in the country’s inflation rate in 2021 and 2022.
While the housing supply was extremely low, demand for both condominiums and freehold houses was up considerably during these years, which created multiple offers on properties and caused prices to increase significantly.
Right before the pandemic, Canada’s inflation rate was 0.72 per cent and the real estate market in Barrie was quite healthy. Properties were affordable and values were increasing marginally at a steady pace.
Once the world pandemic was declared, the demand for real estate outside of the Greater Toronto Area (GTA) started to increase, which put upward pressure on housing prices in Barrie.
From the beginning of the pandemic to the peak of the market in March 2022, the average sale price for a condo apartment increased 38 per cent, and the condo-townhouse sector recorded a 44 per cent increase.
A few months later, the Canadian inflation rate hit 8.1 per cent, which was the highest inflation rate recorded since the early 1980s recession.
There was definitely cause for concern, so the federal government started to watch Canada’s inflation rate closely and put a plan in motion to bring the inflation rate down. They did so by influencing consumer spending through adjusting the interest rate. When the inflation rate is high, the government increases interest rates, which raises the cost of borrowing causing people to think twice about their spending.
Since mid-2022, interest rates have increased eight times in the attempt to bring inflation down to a two per cent target.
Although Canada has not yet reached its target, the inflation rate has decreased to 3.8 per cent and interest rates were held in both September and October when a rate change could have been announced.
Canada seems to be on its way to a more stable economy, but it is unknown if there will be a further interest rate increase this year or in 2024.
Since the peak of the condo market in Barrie in 2022, the average sale price for a condo apartment has gone down by 14 per cent and the condo-townhouse sector has decreased by 18 per cent.
In October, there were a total of 14 condo apartments that sold in Barrie. The average sale price was $554,107 and it took an average of 38 days to sell. There were only seven condo-townhouses that sold last month, with an average sale price of $529,429 and the average days on market was 41.
There are currently a total of 165 condominiums for sale in Barrie, including 132 condo apartments, 10 stacked condo townhouses and 23 full condo townhouses.