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TORONTO -- Canada's housing market could see a significant pullback this year because of the COVID-19 pandemic, but could rebound next year, a report by RBC says.

This year's home resales could dive by 30 per cent to a 20-year low as physical distancing limits sales while the economic fallout erodes confidence and leaves speculators sitting on the sidelines, said bank analyst Robert Hogue.

"Canada's housing market will slow to a crawl this spring as Canadians follow social distancing orders in order to combat the spread of COVID-19."

Market activity in the Greater Toronto Area is already showing a sharp drop-off.

John Pasalis of Realosophy Realty said in a report that while sales were up 50 per cent in the first two weeks of March compared with a year earlier, by last week sales were down 37 per cent compared with a year earlier, while new listings were down 33 per cent.

Pasalis said average prices are still up over last year, but that prices have trended lower over the month.

Hogue said home prices could stay stable in the near-term as both buyers and new listings pull back, but expects the composite benchmark price to fall 2.9 per cent in the second half of this year compared with last year.

"In a matter of weeks or months, surging unemployment and the market's illiquidity will compel a growing number of tight-squeezed sellers to make price concessions."

The trends, however, could reverse next year as low interest rates, a strengthening job market and a bounce-back in immigration help sales to surge more than 40 per cent in 2021 and price dynamics also return to favouring sellers, Hogue said.

The report said Prairie economies that rely on oil will feel the housing pullback more acutely, with price declines "bound to re-accelerate significantly" and little prospect of prices rebounding any time soon.

The report also notes that the bank's affordability measure, defined as the share of median income needed to cover home ownership, was steady at 50 per cent in Canada in the fourth quarter of 2019. Vancouver was highest at 80.4 per cent, Toronto at 68.2 per cent, while Edmonton was 31.6 per cent.