Month: January 2019
Based on a leading indicator for where home prices are headed, an economic-research firm is predicting a booming year for one of Canada’s largest housing markets.
The Canadian housing market’s performance has been even worse than TD expected, but there are multiple reasons one of Canada’s biggest banks doesn’t predict “a further sustained deterioration” — or worse — this year.
Canada’s home prices increased 4% year-over-year in the fourth quarter of 2018, a sign of the market recovering from “the most significant housing correction” since the financial crisis.
The Bank of Canada has stepped to the sidelines since it last hiked the overnight rate, which influences rates on the mortgage market, this past October.
By one measure, conditions in Canada are reminiscent of those present in the US right before a stateside housing bubble burst, yet a repeat performance to the north is unlikely.
“The problem, though, is that Canada has been undergoing a construction boom. As has been typical of historic real estate cycles around the world, new supply will reach the market just as demand is falling,”
“The number of consumers claiming insolvencies could continue to trend higher, but the good news is the upswing is nowhere near the double-digit gains seen during the depths of the financial crisis,”
The head of Canadian Imperial Bank of Commerce (CIBC) said that the country’s mortgage industry will plateau in the near-term, with growth limited to the low single-digits.
“For now, as we expect the Bank’s forecasts to be… more upbeat than our own, we would not be surprised if the Bank of Canada continues to argue that it needs to raise interest rates,” reads a Capital Economics Bank of Canada Watch
A significant proportion of Canadians are beginning the year with tempered expectations for the housing market and the national economy, according to the latest findings of the weekly telephone polling conducted by Bloomberg Nanos Canadian Confidence Index.
As much as 76% of Canada’s national wealth is locked into real estate, according to Statistics Canada’ late December report covering “value of non-financial assets” during the third quarter of 2018.
Like many other market observers, Central 1 expects the Bank of Canada will hike its influential key interest rate this year — but the credit
As he sees it, there’s just one problem. “The problem is, it was probably too much, too quick.”
Less than 60% are feeling good about the economy this year, however – considerably lower than the 65% in 2017. The proportion of those pessimistic about the economy is also catching up, at 41%.
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