Canada’s largest bank is prepared for price drops most would find unthinkable. The Royal Bank of Canada (RBC) filings show possible risk scenario forecasts. Over the next year, the base forecast shows virtually flat growth. In the best scenario, growth would hit a similar level as in previous years. However, in the worst case, the RBC forecast that prices could face their biggest drop since the early 1980s. 

However, the bank says that the base case scenario is for prices to rise by 0.6% over the next 12-months, with the numbers starting in October 2020. They expect compound annual growth to total just 4.5% for the following five years.

The best case sees prices rising by 6% over the next 12 months, followed by compound annual growth of 11%. However, the worst case scenario is for real estate prices to fall by almost 30% over the next 12 months with prices only rebounding by around 3% in the following five years.