M city condos 5. House prices in Canada have fallen for six consecutive years. The Canadian house price index recently released by the National Bank of Canada shows that Canadian house prices fell 0.3% in March from the previous month, the sixth consecutive month of decline.Please Visit: M city condos 5 to Get Your VVIP Registration Today!
More indicative is that there have been only two “March falls” in the 20-year-old house price index.
The Canadian house price index recently released by the National Bank of Canada shows that Canadian house prices fell 0.3% in March from the previous month, the sixth consecutive month of decline. More indicative is that there have been only two “March falls” in the 20-year-old house price index, the last in March 2009 after the subprime crisis.
James Knightly, an analyst at ING, wrote that falling home sales, rising debt servicing costs and new mortgage regulations have all put pressure on Canada’s housing market. At the same time, the current situation also gives the Bank of Canada more reasons to maintain its current monetary policy, and the housing stimulus policy, which will not be launched until autumn at the earliest, also increases the risk that the Canadian housing market will continue to fall in the short term.
Data released earlier by the Canadian Real Estate Association (CREA) showed that Canadian home sales fell 9.1% in February from the previous month, the lowest since November 2012. Now you can imagine the difficulty of selling a house in Canada.
Knightly points out that the current woe of the Canadian housing market is closely linked to higher benchmark interest rates (two rate hikes in 2018) and stricter mortgage policies. At the same time, the financial crisis of Canadian citizens is hidden behind the depression of the property market.
First, as property prices fall, homeowners (lenders) are concerned about their own financial balance. They will at least sell before the value of the house falls below the loan balance (the overall value of the property is negative). At the same time, debt-servicing costs are rising sharply as the Bank of Canada raised interest rates by 50 basis points last year, compounded by the fact that Canadian households have high debt ratios.
To make matters worse, due to the rising credit threshold, the lack of suitable sellers is also the reason for the continued weakness of the property market. In short, it is harder for people with “fragile” sources of income to get mortgages.
Canada’s 0.3 per cent month-on-month GDP growth in January was not only an economic “surprise”, but also a real boon for the property market. According to Statistics Canada, the construction sector recorded its first growth in nearly eight months, while residential construction increased for two consecutive months. Although the construction industry itself is characterized by high volatility, the earlier increase in the number of construction permits has further consolidated expectations of subsequent increases in real estate investment.
In addition, first-time home buyers are undoubtedly the biggest winners in Canada’s 2019 federal finance bill announced this year. The Canadian government is prepared to give them some relief for housing-related expenses (estimated to be a total of C $885 million over five years). In particular, it should be pointed out that this policy will not land until at least this autumn.
Knightly believes that taking into account the expectations of stimulus policies at the end of the year, do not rule out the possibility of delaying home purchases from buyers. Therefore, before the implementation of the policy (the fourth quarter of this year), the Canadian housing market is likely to face a further correction, and some data may fall short of market expectations.
Canada’s household debt-to-income ratio reached a staggering 176.3% in 2019, the highest since 1990. Given the hidden worries of the global economy entering a downward cycle, such high debt leverage is bound to create economic uncertainty in the future, and it is also a ticking time bomb for the Canadian economy.
Knightly analysis said that the current Canadian central bank must be willing to wait patiently for the next direction of the global economy. Given the fact that the Big Brother Fed is becoming more and more dovish, it is expected that the Canadian central bank will change its policy stance or maintain the status quo for a longer period of time.