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Announced that it would maintain the historically low benchmark interest rate of 0.25% until the next interest rate date.
Perhaps in view of the great public anger caused by not raising interest rates, the Bank of Canada specifically said: “with the acceleration of vaccination and the relaxation of epidemic restrictions in Canadian provinces in the summer, the Canadian economy is expected to rebound strongly, led by consumer spending. Activity in the real estate market will slow. ”
The implication of the Bank of Canada is that Canadians are starting to go out in the summer, and the house-buying craze is likely to be replaced by the consumer craze.
But the reality is that Canada’s current inflation rate, even without counting house prices and rents, is an astonishing 3%, while the Bank of Canada aims to control inflation to less than 2%.
With real inflation already 50% higher than the target rate and refusing to raise interest rates, it is no wonder that Canada’s commercial banks have collapsed.
However, the Bank of Canada left a sentence at the end of the interest rate meeting, “it is expected to start raising interest rates sometime in the second half of 2022.”
According to this argument, there may be only a year left for the low interest rate policy left for buyers.
Maybe it’s venting discontent. Maybe I really got over it.
RBC, one of Canada’s largest banks, revised its bearish position on Canadian house prices while the central bank refused to raise interest rates. High-profile judgment:
1. The volume of housing transactions in Canada will increase by 16%, and is expected to reach 636700 units. RBC’s previous forecast was 588300.
2. Canadian house prices will rise by 13 per cent in 2021 and are expected to reach C $697400, compared with the previous forecast of 8.4 per cent in 2021.
Explaining why there was a sudden and dramatic revision of housing market forecasts, RBC said bluntly: they thought the Canadian government would actively use new policy tools to intervene in house prices, but now it is clear that the government has done nothing. The government leaves the market to set its own prices, which means that bubbles will continue to grow in accordance with inertia.
RBC is afraid that everyone does not understand, but also puts special emphasis on “RBC Revised The Forecast Based On Government Inaction”
Perhaps in view of the Bank of Canada’s commitment to start raising interest rates in the second half of 2022, RBC also made a forecast for the Canadian housing market in 2022.
1. The number of housing transactions in Canada will drop to 505300 units in 2022, down 21% from 2021.
2. However, as interest rates begin to rise in the second half of 2022, Canadian house prices are expected to rise by 3.3% in 2022.
“when the Canadian government does not act, the Bank of Canada should act unequivocally,” RBC said in the report.
Huang Sanshui said he was an eye-opener when a commercial bank bluntly criticized the Bank of Canada.
RBC recommends that the Canadian government impose a 1 per cent annual tax on non-resident-owned homes across Canada. And continue to tighten the loan stress testing policy, while increasing the supply of land to allow more housing to be listed.
However, RBC explicitly opposes the Canadian government’s “incentive scheme for first-time home buyers”, which they believe is the government’s involvement in investing in real estate and can only stimulate demand and push up prices.
Although RBC’s original intention is to control house prices, Huang Sanshui believes that some of RBC’s suggestions are too radical, such as RBC asking the Canadian government to adopt destructive policies to crack down on house prices, but RBC does not offer a solution for a stampede sell-off in the market if house prices fall.
There are problems when the real estate market is too hot and too cold, but it will be a big problem if it changes from very hot to very cold.
For the Canadian government, housing prices are only one of many poisons, and we must think about whether the consequences can be borne before suppressing them.