OTTAWA (CU)_Earlier this year, ultra-low interest rates, together with growing demand for larger living spaces amid the pandemic drove a record-setting frenzy in Canada’s housing market. Although the market has somewhat cooled since then, prices have continued to remain elevated triggering a housing crisis across the nation. It was one of the central issues during the election campaigns leading up to the twentieth-September vote, with Prime Minister Justin Trudeau pledging to increase the corporate tax rate on banks and insurance companies to assist Canadians in access an affordable and healthy home.
Now, as the country continues to recover from the worst effects of the pandemic, the steadily improving economy is boosting the housing market after an extended downturn amid the global health crisis. According to the recent data published by the Canadian Real Estate Association (CREA), the country reported its first monthly increase in home sales in six months, with a 0.9 per cent month-on-month growth in September. The last time an increase in national home sales were reported in March, when benchmark home prices rose 1.7 per cent.
However, the report noted that despite the recent boost in sales, the number of houses listed on the market dropped by 1.6 per cent last month.
“Given we are still stuck at around two months of inventory nationally, the thing to keep a close eye on going forward will be the behaviour of prices,” Shaun Cathcart, CREA’s senior economist, said in a press release accompanying the report. “While the acceleration in home prices we saw in September was more than most would have expected, the fact that prices are now moving back in that direction is not surprising.”
Over the recent months, successful vaccination efforts in the North American nation have sped up the economic recovery from COVID, with the unemployment rate dropping to 6.9 per cent and the inflation rate hitting 4.4 per cent.
