With the mass deployment of COVID-19 inoculations underway, Canadians are growing more confident about their economic and financial prospects this year, according to new studies by the Bank of Canada.
In its Canadian Survey of Consumer Expectations covering the fourth quarter of 2020, the Bank found that, on average, consumers are anticipating a 4.98% increase in home prices in the next 12 months. This represented a marked increase from the 4.67% expectation during the third quarter.
“Consistent with the rebound in the housing market, consumers’ expectations for house price growth ticked up from the previous quarter, reaching an all-time high,” the BoC said in its report.
However, this optimism was not as strong in some regions. The BoC stressed that the coronavirus outbreak has inspired a significant shift in Canadians’ housing preferences.
“While the increase was widespread across provinces, expectations remain modest in Alberta,” the central bank said “The pandemic is pushing buyers to prefer larger homes and locations outside of city centres.”
Canadians were also found to be increasingly confident about their spending in the next 12 months, with expectations for spending growth improving from 2.49% in Q3 to 2.84% during the fourth quarter.
“This expected recovery in spending could reflect the impact of the announcements about the development of effective vaccines,” the BoC said.
Similarly, businesses have reported greater optimism, aided by significant infusions from the federal government’s financial aid programs over the past few months.
“Although about half of firms reported that their current sales are below pre-pandemic levels, most firms expect sales to increase in the next 12 months as the economy recovers,” the BoC said.
The central bank’s business sentiment index has recovered from the trough of -6.88 seen during the second quarter, reaching -2.18 in Q3 and becoming positive at 1.29 during Q4.
“This reflects the fact that many indicators moved up as economic conditions partially recovered from extremely low levels seen earlier in 2020,” the BoC said. “Employment and investment intentions saw the largest increases since the autumn survey. Robust foreign demand, improved confidence related to vaccines, and ongoing government relief programs all contribute to the improved outlook.”