House price growth surged after the Bank of Canada cut the overnight rate to its effective lower bound in March 2020. As the Bank raised the overnight rate to 5 percent, house price growth fell, eventually leading to declines in house prices themselves. Despite a steady reduction of the overnight rate to 2.5 percent over the last year and a half, and further cuts anticipated, housing prices have yet to rebound – a reflection of continued affordability constraints and an uncertain economic environment.
For more information, check out related C.D. Howe Institute research.
