Design district.The average single-family in Toronto plummeted by C $300000! Affected by higher interest rates and higher taxes on overseas buyers, house prices in Canada are under a “full siege” (full-scale attack) of new government regulations at all levels. Bank of Montreal.Please Visit: Design district to Get Your VVIP Registration Today!
House prices in the greater Toronto area are expected to fall by 10%, 15%, or about C $300000, based on the average price of more than C $2 million for detached houses in Toronto, Manjin and Richmond Hill.
“House prices in Canada are now besieged by policies at all levels,” Robert Kavcic, senior economist at BMO Bank, wrote in a note to clients on Wednesday morning.
Mr Kavich cited clear expectations of a surge in interest rates in the coming months, as well as new or higher taxes on property speculators and non-resident buyers in some provinces, which are likely to be the biggest hit to house prices in the coming year.
Money markets are betting that the Bank of Canada may raise its overnight interest rate target by up to 225 basis points by the end of 2022, Reuters reported this week.
Such a rate hike could quickly climb the central bank’s benchmark interest rate to 2.75% from the current 0.5% over the next nine months.
To this end, the central bank is likely to take the rare measure of raising interest rates by 0.5 percentage points at its next meeting on April 13.
BMO expects to raise interest rates by 50 basis points in the next two Bank of Canada announcements, followed by a 25 basis point hike in July.
The Bank of Canada raised interest rates by 25 percentage points for the first time earlier this year, a move that some observers say has had a “cooling effect” on the country’s red-hot property market.
In an interview with Global News on Wednesday, BMO bank Cavich said it was controversial that the Bank of Canada was “far behind the curve” in raising interest rates as inflation soared and house prices continued to hit records.
“because of this, they will act quickly,” he said. “this is the biggest single measure we can take here to more broadly slow the pace of house price growth and soaring inflation.”
However, the Bank of Canada is not the only player aimed at cooling the property market.
The provincial government announced this week that it would raise the existing tax on non-resident buyers to 20% and extend the policy to the whole province.
Scotia also said it would impose a purchase tax (purchase tax) on non-resident buyers.
Kavich believes that the participation of investors and real estate speculators has been one of the factors driving up Canadian house prices.
“We have seen that over the past year, some speculation and investor activity have pushed up house prices beyond the reasonable levels justified by income, employment, population growth fundamentals and all the factors that normally drive house prices,” he said. “
