The housing market in Ontario has remained hot for several years now, but this may change soon, with some areas being more affected than others.

A new report issued by the Canadian financial services agency Desjardins stated that the Canadian housing market has reached a "turning point".

Since the Bank of Canada started raising interest rates to combat inflation, house prices have steadily declined. A Desjardins official said that the average home price in Canada fell by 2.6 percent month-over-month in March and 3.8 percent in April.

The report says these declines should continue and will be sequentially observed in Ontario where housing prices are expected to drop by 18 percent.

The report stated: "We expect the housing market correction in Ontario to be driven by declining sales activity and prices in smaller centers outside major urban areas."

"We believe prices will fall further in communities that saw the largest price increases during the pandemic, which caused the biggest affordability problem."

As a result, multiple areas just a few hours outside Toronto are set to see price declines, the report claims.

Among these areas, Bancroft is expected to see the largest price drop, followed by Chatham Kent and then Windsor-Essex.

Toronto real estate agent Desmond Brown said he "always believed the first areas to see price declines would be the remote communities around Toronto."

He added: "The sustainability of prices that we were witnessing was completely unrealistic."

For this reason, he estimates prices in these areas may soon fall to pre-pandemic levels.

The report expects Toronto prices to remain somewhat high.

Rural areas will soon see price declines, while Brown believes the Toronto market will be slower to experience these price drops.

On the same topic, he said: "Toronto has a much better chance to keep prices higher compared to remote communities." "This is because the city is the economic engine of the country, and there is still strong demand from people to live in Toronto, even though we see more of the hybrid work model these days, whether from home or the office."

Edited by: Dima Abu Khair