October Market Update
GDP and the Housing Market
On September 30th, Statistics Canada released a report stating that Canada's GDP 'stalled' in July, reversing its June growth of 0.1% to slide back to no growth in July. While these numbers seem small, economists had expected Canada's GDP to grow by 0.5% and the figures suggest Canada may not bounce back as quickly or fervently as once hoped.
Surprisingly, the sectors that achieved the most gains in July were Eastern Canadian industries such as motor vehicle and parts production, while Western Canadian and big city sectors like mining, construction, and retail trade all faltered. This stands in stark contrast to Canada's Consumer Confidence Index, which rose once again, and shows that Canadians believe that an economic recovery is at hand.
The real estate market has benefited tremendously from this increase in faith from the Canadian public. Home prices across Canada have risen for 3 straight months and several municipalities are seeing prices above pre-recession levels.
This is important to note. While economics plays a role in housing prices on the supply side, it has to be looked at in lock-step with the demand side, which is to a great extent dictated by a combination of Consumer Confidence and demographics.
So while the economics of housing may be lagging behind, Consumer Confidence and population inflows to Western Canada have, once again, begun pushing prices upwards.
To learn more, please feel free to contact me at the address above.