This Week’s Top Stories: Canadian Policymakers Want High Home Prices, & Investors Flee

Time for your cheat sheet on this week’s top stories.

Canadian Real Estate

Canadian Home Prices “Need” To Be High To Pay For Retirements: PM

Canadian Prime Minister Justin Trudeau just said the quiet part out loud. In a recent interview, the country’s head of government stated that he wants affordability to improve, but prices need to be maintained for retirements and nest eggs. It’s a bit disingenuous to pretend that households planned on record price growth to occur over a short period based on emergency rate cuts, based on a pandemic, but let’s look past that. 

If the plan was for home prices to never fall, what exactly are they spending billions on when it comes to improving affordability? We’ve long maintained that many of the “affordability” programs were actually demand inducement schemes used by other countries to raise prices. They may have finally just admitted that was always the case. 

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Canadian Households Just Entered A Lost Decade of Economic Growth

Canadian households spent the past decade going in a circle when it came to prosperity. Gross domestic product (GDP) advanced but not nearly enough for the country’s population. When adjusted for population, per-capita real GDP has rolled all the way back to roughly the same level it was in 2014. In other words, households have seen one of the primary measures of prosperity stagnant over that period. Welcome to Canada’s Lost Decade. 

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Canada Sees Investment Flight As Economy Slows & Gov Targets Investors

Canada used to be considered a safe haven for investors, but that’s no longer the case. Domestic and foreign investors are looking for more opportunities abroad than in Canada in Q1. Local investors sent significantly more capital abroad than they return, and foreign investors withdrew significantly more than they sunk into the economy. The agency notes foreign investors divested for the first time in the past 14 years. 

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Nova Scotia GDP Per Capita Slipped All The Way Back To 2016

Nova Scotia has seen its population explode in growth but it’s not providing the expected economic boost. Per-capita real GDP hasn’t just failed to retake its pre-pandemic levels, but is now on a steady slide lower. The erosion has sent the province all the way back to the same level as 2016. Rather than experiencing an economic boom, the growth that greatly outpaced the local economy’s capacity to grow has led to stagnating real incomes. 

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Canadians Now Consider Stocks To Be Their Preferred Investment: Survey

Canadian real estate has been the preference for investing, outperforming domestic equities. However, that preference may have run its course according to an investor survey from financial product comparison site HelloSafe. Their research found most investors now prefer stocks to real estate, even when it came to older investors that most likely made the bulk of their wealth through housing. 

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Canadian Real Estate Profits Shrank More Than Any Other Industry

Is price gouging behind the recent surge in profits? Not exactly, according to Statistics Canada data analyzed by BMO. Most industries are seeing the rate of profit in the historical range, which is not all that significant. One major exception was real estate, with Q1 firms seeing profits fall significantly below the historical range over the prior decade or so. Don’t worry, even with this performance, the industry has the second largest profit margins. Margins which happen to be multiples of most other industries.

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Canadian Business Growth Is The Slowest In Years, Monthly Closures Rise

Canada’s record population growth means a huge opportunity for new businesses, right? That’s not what the data shows, with new business growth slowing to a level not seen in years. Adding to the problem is the number of businesses closing, which have hit a breakneck speed. The post-pandemic business environment has been tough, as operators face elevated costs and consumers tighten their spending to pay down their supersized mortgage debts. Now it’s getting worse, as unemployment climbs and targeted taxation creates penalties for operators.

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2 Comments

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  • Nazrul 1 month ago

    After reading the Topic I understand that the opposite way of Canadian Policymakers. They are thinking opposite to the reality. Foreign investors money almost Black money. They are bringing Black money from 3rd world countries. They dont care whether the price of a home is 1 million Dollars or 5 millions Dollars. They will buy whatsoever the price. Because, their money is unlimited. All is garbage thinking by the policymakers.
    This thinking will kill the Canadian citizens. They cannot afford to survive. This is a survival question for the citizens. I bet on this point. The citizens will go without home more and more in number. Please do not make the home price go up. Again, for foreign buyers no problem the price. Because their money is unlimited Black money.

  • Dick Harper 1 month ago

    Maybe one day everyone will finally realize there are no sides and the government no matter what side has always worked against the people.

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