What will affect real estate in the weeks ahead?
Real estate seems to be in the news every day, for one reason or the other.
This week, the Bank of Canada announced – again – that it will maintain key interest rates at 0.25%. However, rates may climb back up sooner than we thought, thanks in part to the strength and resilience of Canadian businesses.
When the BOC lowered interest rates in response to the pandemic and its effects on the economy, the bank’s governor Tiff Macklem reassured the country that rates would remain at an all-time low until our economy showed signs it is on a sustainable path to recovery. That moment may come sooner than we thought! In praising Canadian businesses, the governor predicted an almost seven percent growth of the global economy in 2021. He also stated that the underlying foundation of the Canadian economy had not suffered serious damage from the pandemic, as the Bank had originally predicted it would. As a consequence, rates may go up in the second half of 2022.
Meanwhile, also this week, the federal government proposed a tax to target foreign owners of vacant or unused properties. If passed, the tax would charge homeowners one percent of the properties’ value and take effect on January 1, 2022. The government plans to invest the money raised from this tax in creating at least 4,500 affordable units to add to Canada’s housing stock.
What will happen to our red-hot housing market? According to Macklem, the new higher stress test introduced two weeks ago, together with the proposed federal tax on unused properties, will be enough to slow the housing market.
If you plan to take advantage of the low interest rates while they are here, MOBILAW™ can assist with purchasing, selling, and refinancing your residential property. Please email us at [email protected] or call us at 1833.662.4529.