Canadian Real Estate May Get Cooling Measures As Early As This Month: Scotiabank

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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  • Jason Chau 3 years ago

    They’re going to screw this up big time, and some how not make it any more affordable.

    • Smiley 3 years ago


    • khalid yusuf 3 years ago

      The policy makers keep talking about cooling the market (dampening demand) rather than increasing supply. The fact that they only consider one side of the equation suggests they’ve given up on the policy failures that perpetually restrict supply and cause a mismatch between supply and demand. The only possible outcome is worsening Affordability. It’s insanity but the they keep doing this as well as going out of their way to vilify any govt that seeks to increase supply by speeding up the process and freeing up more land. We can’t continue to be like spoilt children who want everything and are unwilling to work for it or be practical about the trade offs one must make to maintain unrealistic idealism

      • LT 3 years ago

        Canada already spends billions subsidizing new development. The money is too damn cheap is the issue.

        • Derek Pandke 3 years ago

          I agree that is certainly part of it. Plus CMHC holding the bag as a guarantee and also rampant speculation.

        • Concerned Canadian 3 years ago

          Got has another trick up their sleeve. Its called immigration. When supply begins to increase which will start lowering prices they will start opening the floodgates. This will help keep prices from falling or set off another rally driving up the prices again. Big brother is in control and will always have their hands in controlling our standard of living. Canadian citizens ( our young) will fail in owning homes and foreigners with money will continue to enter our country and steal our homes. We will see the young Canadian educated leave Canada for another more adorable place to live ( probably iceland) taking all their potential and talent with them. Leaving our country with nothing but useless skills and poor national progress. Its a massive sellout. This is the mastermind of your number one Canadian fan. His name is Justin Trudeau!

  • SH 3 years ago

    No “cooling measures” will be sufficient to counteract the Liberals’ mass immigration “kick out Canadians from their cities” plans this year.

    • Terrance 3 years ago

      Immigration is subject to competition. You can’t just pile in an “mass” numbers. Canada benefit from the US leadership becoming openly hostile. It was one term, and largely due to B-visa restrictions that are going to be reversed.

      Canada is also going to have to compete with a post-COVID economy, where local governments are trying to get foreign countries to compete. Like India for example, trying to incentivize the creation of Amazon development jobs locally.

    • Shu 3 years ago

      People should cannot affors to live in Canada unless they can make 6 figures. It should be in the welcome package

  • Fred Rankel 3 years ago

    These insane price increases all started when the Government created restrictive measures such as the ORM and Greenbelt. They implemented these measures without any real protective thought.
    This eliminated a large portion of good buildable land from the supply. Thus increasing land costs. It is that component of the total housing cost that is creating the upward pressure on pricing. Costs for engineering, materials, consultants has remained steady for the last 15 years and in line with CPI. The Government needs to revisit these measures and “Release” more buildable land into the system.

    • Van Millennial 3 years ago

      Powerful Green Belt. Some how its impacting prices right across the country, all the way to B.C. Wynne must have been a powerful sorcerer.

    • Paul 3 years ago

      You are so off base.

      The green belt is necessary for so many reasons.

      If you are for housing and affordability you would say density. Not sprawl. You sound like you are on the take.

  • Andrew Sommers 3 years ago

    Wynne and Trudeau screwed with it in 2018 and forced a crash! Look where we are now!! I suggest you start a slow rise in interest rates followed by normalcy where people will get out and do things (instead of looking at all the time) and then see if measures are required!!

  • Fred Rankel 3 years ago

    Hi Paul; I really do not know anyone who would pay for my opinion; and therefore, I am very flattered by your comment. The issue is affordability. I would welcome your opinion on why people are paying 4 times the true value for Condos and houses. That is the real issue.

  • SB SB 3 years ago

    I believe govt and policy maker need to think about these unbelievable skyrocketing prices which are not even worth and rethink about those common people who need homes but can’t afford such rising prices. Govt is only filling pocket of their already rich friends like investors and big real estate partners by doing so; specially the realtors in Toronto and Vancouver who are also behind this such rise, they fuel the sellers with more expectations just to secure their higher commission on high prices. So buyers too, they need to be vigilant of inevitably forthcoming housing crash in few weeks or so, as many buyers don’t even realize before bidding on the existing offers that even if at present they are able to give down payments about 10 to 20% how will they stand in the long run.
    Particularly, soon when all banks will be rising their mortgage rates, economy is going to hit drastically at its low level and no kidding – Govt may soon be going under big debts who is already struggling with its outcomes of squandering people’s taxes money lately, and it’s all coming on us me and you all who will be made to pay higher taxes, higher CPP cuts, rising petrol prices, inflation of every day needs etc. All Bull shit….Our PM is just ensuring his future vote bank and does not even care about middle class or common Canadians.

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