One of Canada’s big banks expects cooling measures for real estate soon. Derek Holt, Scotiabank’s Head of Capital Markets Economics, sees the Spring Budget including cooling measures for real estate. In a note penned to investors, the economist highlights how policy has been overly loose. He feels the next budget likely includes measures to cool the market, which can come as early as the end of the month.
Canadian Home Sales Are Unusually Strong For A Pandemic
Canadian home sales are extremely strong. Not just for a recessionary environment, but in general – they’re better than they were in Canada’s best economy. Holt points to Toronto home sales reported earlier this week. Sales were up 15.9% for the previous month, when seasonally adjusted (SA). This follows a 3.1% monthly increase in January, which followed a 21% monthly increase in December. He also notes these increases are accompanied by fast rising home prices.
Greater Vancouver also reported an equally hot market just a day before Toronto. National sales data will be released later this month, and is likely to show similar trends across Canada. This is occuring in the winter, which Holt emphasized multiple times. He further adds, “Apparently, there are a lot of masochists out there who are not fussed one bit about moving in -20’C or colder weather and heavy snow!”
Canadian Home Permits Increased Over 7%
Canadian new home permits are also a point watching, according to Holt. He highlights house permits increased 7.3% m/m in January. This breaks down as 15.1% m/m for singles, and 4.1% m/m for multiples. This doesn’t just highlight a rapidly expanding market, but “reinforces the move to the ‘burbs” narrative, he stated.
“If Canadians are taking out permits and buying resales at such a pace during the winter, what does that say when the key Spring housing market and vaccines arrive?” Holt wrote. Adding, “Policy is arguably overly easy and macro prudential changes may be afoot in a Spring budget.”
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