Residential Market Commentary - Week of June 12, 2017
2017-06-14 | 14:48:07
Market watchers have been keenly focused on the surprising May sales numbers, especially out of Toronto and Montreal. While Toronto slumped in the aftermath of the Ontario government’s efforts to slow the market, Montreal had an outstanding month. At the same time the Organisation for Economic Cooperation and Development added its voice to the international call for greater efforts to cool Canada’s hot markets.
The OECD is pretty bullish on the Canadian economy with a growth estimate that exceeds the Bank of Canada’s forecast. The Paris-based think-tank expects the central bank will have enough room to raise interest rates by the end of the year. While its report calls for more intervention to avoid a “disorderly decline”, the OECD also expects rising interest rates will have a helpful cooling effect.
It is not clear how the OECD sees Canada’s growth in such positive terms given that the organization also recognizes the growth is being fueled by housing, consumer spending and debt. All of which will sIow down when interest rates rise.
The OECD may have handed some support to the housing industry by criticizing the Ontario government’s plan to expand rent controls. The report points out the controls could stifle new rental construction. A low rental supply would drive up costs and hamper labour mobility, according to the OECD. This, of course, would hurt the people it is supposed to help – low income households and the young.