“The housing sector is a key source of strength to Canada’s economy,” Phil Soper, CEO of Royal LePage, wrote in a LinkedIn post entitled Bank of Canada Should Stand Firm in wake of Canadian Economic Stagnation
. “Now more than ever it is important to keep markets functioning by holding firm on low rates.”
According to Soper, the Canadian housing market is healthy and the Bank of Canada can ensure it remains so in the future by holding interest rates at current levels while the economy bounces back from the current weakness of the energy sector.
Soper also weighed in on Toronto and Vancouver’s housing markets – oft-debated hot markets that resisted the kind of slowdown affecting many other major centres.
“The concern here is that strained affordability leaves these markets more susceptible to external shock,” Soper wrote. “If policymakers are to assist the market in these two mega-cities achieve a ‘soft landing,’ I believe the safest approach is to let demand cool with seasonal change, giving the rest of the nation time to work through the impact of the oil shock.”
Despite a “stalled” economy in the first quarter of 2015, the Bank of Canada revealed some optimism as it held steady the target for the overnight rate at its rate announcement in mid-April.
“Risks to the outlook for inflation are now roughly balanced and risks to financial stability appear to be evolving as expected,” the Bank of Canada wrote in an official release. “The Bank judges that the current degree of monetary policy stimulus remains appropriate and therefore is maintaining the target for the overnight rate at 3/4 per cent.”
Super-low rates are here to stay; at least if the Bank of Canada heeds one real estate CEO’s advice.