In October, the inflation remained at 6.9%, the same as in September. This is good news, as the expectation was that it would rise due to the increased fuel and food costs.

If you look at inflation over the last year, it was in March when the BOC did their first hike in the overnight rate; inflation was at 6.7 % and had jumped a full per cent from the month before.

The below graph show what happened to the average sale price in Guelph. We can see it took two months after the initial BOC hike for the prices of homes to start to decline.

The BOC will closely watch inflation to decide the overnight interest rate at their next announcement on December 7th. We predict we will still see a modest increase of around 25 basis points & that we are nearing the end of interest rates hikes

Prices in Guelph appear to be levelling off since July. I predict prices will remain fairly flat for the remainder of the year. We may see the Bank Of Canada do one final rate hike in January, but I believe that will be the end.

Most financial analysts think the BOC won’t raise the overnight rate over 4.25%. BOC is in a very delicate situation if they raise them too high, they would drive Canada into a deep recession, and they don’t want that.

Sometime next year, interest rates will stabilize, and then they should start to go down in 2023 or 2024. When the interest rate stabilizes, housing prices will likely increase at a normal rate. Historically in Guelph, houses appreciate 1 to 2% above inflation in a stable economy. There is still a lot of demand for housing in Ontario, and with Canada’s aggressive immigration goals, that demand will only increase.