Policymakers launch ‘full-scale attack’ on Canadian home prices, BMO. Is said
The Canadian Real Estate Association said national inventory levels were at an all-time low in January and December last year, causing the non-seasonally adjusted total home price index to rise a record 28% year-on-year in January.
Kawasik said four things could derail the rise in housing prices, which have put many first-time homeowners out of reach.
Higher and increased taxes on non-resident homeowners in Ontario, as well as the 2% tax on foreign homebuyers announced in Nova Scotia’s budget, are two themes that Cavik noted. He also referred to the recent increase in mortgage rates as the Bank of Canada prepares to raise rates again.
Several analysts, including BMO recently, have argued for a half-point hike at the bank’s next policy meeting in April, while Citi and BofA have called for a half-point hike in each of the next three rate-setting meetings.
Bond market movements have already made fixed-rate mortgages more expensive, with the trend-setting yield on Canadian government five-year bonds reaching nearly 2.5% in the past week, compared to 1.25% at the end of 2021.