Market growth and activity in the Canadian housing sector will trend downward this year amid the sustained economic impact of the coronavirus outbreak, according to a recent study by Moody’s Analytics.
In its “Canada Housing Market Outlook: Tough Times Ahead” report released last month, Moody’s said that any pre-pandemic forecasts will have to be essentially scrapped.
“Shelter-in-place orders and social distancing have brought house hunting to a virtual halt while layoffs, the collapse in oil prices, and the plunge in equity prices have kept prospective buyers at bay,” Moody’s said. “The COVID-19 pandemic comes at a terrible time for Canada’s economy. Trade and investment were already struggling to make gains as the U.S.-China trade war and Brexit weighed on global demand. The pandemic soured this already-weak outlook almost overnight.”
With a clear majority of Canadians preparing themselves for the economy to worsen over the next few months, weaker consumer confidence and purchasing power will affect some regions more than others.
“The worst effects will be felt in regions that rely disproportionately on the leisure/hospitality, trade and energy industries,” Moody’s said, pointing at British Columbia and the Prairie provinces, in particular.
The report also said that these events will most likely aggravate other worrying trends.
On the national level, “the mortgage debt service ratio tracked by Statistics Canada increased from 6.4% of disposable income in mid-2016 to 6.8% in late 2019,” Moody’s said. “Consumer debt performance has also shown some signs of strain. In particular, bankruptcy filings and insolvency proposals have risen.”