While a great deal of the report focused on US policy change projections, exports, and core inflation, the Bank of Canada also snuck in a few bits about the housing industry. This is what brokers need to know.
Foreign influence to be curbed
This will come as no surprise to industry players, as the effects are already being felt in Vancouver.
“Residential investment should … be dampened by measures recently introduced by local governments to curb rapid growth in housing sales and prices,” the Bank of Canada said in its Monetary Policy Report.
Growth in Chinese business investment in Canada is expected to taper as well, according to the Bank.
Housing’s contributions to the economy
Housing’s contributions to average annual real GDP growth declined last year (0.2%) from 2015’s mark of (0.3%). That downward trend is expected to continue this year (-0.1%) before making its way back up in 2018 (0.1%).
"Mortgage interest rates have increased since October, mainly reflecting higher funding costs, the Bank said.“As in October, the Bank estimates that the impact of the federal government’s tighter housing-related measures will subtract 0.3% from the level of real GDP by the end of 2018.”
Growth to moderate to 2% due, in part, to housing measures
Residential investment is expected to contract further as resale activity is dampened by higher mortgage rates and the recent federal housing finance policy changes, the Bank said.
On the positive side, both strong household consumption and infrastructure spending are expected to support that growth.
An eye on the industry
The Bank of Canada said it continues to monitor housing activity as well as household spending and indebtedness, saving behaviour and consumer sentiment.
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