Bank of Canada interest rate: 5 %
Canadian prime rate: 7.2% - Canada inflation today: 2.9 %
Residential real estate sales and prices have risen due to optimism about the Bank of Canada interest rate reduction in the next few months. As I have stated in the past, there is no certainty of lower rates until there is a prolonged period of stability to lower rates. For now, rates are like a yoyo.
In addition, due to the housing shortage, the federal government has decided to extend the ban on foreign real estate investment until 2027. I’m not sure this is the best strategy going forward, given the weakness of supply and demand.
The market is mainly affected by other factors such as inflation and interest rates which in turn are influenced by war, politics, and pandemics. Why extend the ban when Canada can use the investment and boost the market if foreign investment is not the key factor affecting the market?
Have a great week.