Employment and immigration woes are likely to weigh on the Canadian housing market, a new Reuters study has found.
The poll, which surveyed economists and market analysts from June 9 to June 23, came in the wake of a 0.1% annual increase in home prices in May – the strongest result for that month in two years. This accompanied the rise of unemployment to a historic high of 13.7%, however.
“Employment ... will be influenced by our domestic handling of the pandemic, the quality of economic recovery among our key trading partners, and re-opening our borders to countries that are our primary sources of tourists and international students,” said David Stroud, chief executive at the Vancouver-based property advisor Mortgage Sandbox. “With so many conditions required to return to pre-COVID activity levels, it is likely the recovery will be slow, gradual, taking a few steps forward and sometimes a step back.”
The respondents’ consensus was that Canadian home prices will likely see just 1.5% growth this year, which was markedly lower than the 4.5% projection in the March edition of the Reuters survey.
“Hopefully, unemployment will be low enough when most financial bridges and mortgage deferrals end," said Sebastien Lavoie, chief economist at Laurentian Bank Securities. “A small but not negligible share of job losses recently will end up in long-term unemployment. Also, COVID-19 anxiety weighs down on labour market prospects, delaying housing purchases. A key risk specific for Canada is tied to the achievement of the federal immigration targets, which underpinned housing demand in recent years.”