APRIL 2, 2024: GDP Growth, Interest Rates, and Vacant Home Taxes
The latest GDP numbers have us all playing a guessing game (more on it below), trying to figure out when the Bank of Canada will cut rates next. It's like we're all on this economic rollercoaster, right? The ups and downs keep coming, especially in the housing market and with all the policy shifts. It's enough to make your head spin and leave you feeling a bit off, kind of like that queasy feeling you get on a real rollercoaster. So, we're all in this together, hanging on and hoping for a smoother ride ahead.
With that, here's the latest edition of THE ROUGH DRAFT!
Canada's GDP Grew Stronger Than Expected...
Canada's GDP reading for January 2024, came at 0.6% which turned out to be stronger than anticipated with February's estimated growth of 0.4%. So if these estimates hold and even if March stays fairly flat, we may still be seeing a fairly strong Q1 2024 at 3.5% annualized growth rate, according to BMO's Chief Economist, Doug Porter. Some argue that this rebound could push the BoC to hold the rates longer than the market has anticipated.
OUR TAKE
We think the guessing game on interest rate cuts will likely continue for the time being. However, with recent policy decisions to slow down on temporary foreign workers, international students, and overall consumer sentiment on lack of affordability in Canada, we are still betting on the Summer rate cut. From a housing standpoint, we're seeing the market to be in a Balanced territory since the start of the year and anticipate to stay that way for the time being.
More Vacant Home Taxes Coming to Ontario?
The provincial government in its latest budget continued to restate their commitment on building 1.5 million homes by 2030-2031. At the same time, the government has communicated to "empower municipal governments" to make more vacant homes available for rent through the use of vacant home tax. At the moment, Toronto has been the only municipality with a 1% vacant home tax on a residential property's assessed value which will actually increase to 3% for 2024. The Non-Resident Speculation Tax or Foreign Buyers Tax may also see further "strengthening" to support compliance and improve fairness, according to the provincial budget.
OUR TAKE
The jury in our opinion is still out in order to accurately assess the impacts (either positive or negative) of Toronto's vacant home tax collection esp. on the availability and cost of a rental unit. The city did, however, collect over $50 Million in revenue in its first year and with a 3% increase for 2024, this could add another $50+ Million to the city's coffers. Assumption is that this revenue will eventually fall as more and more people will begin making their housing units available for rent.
The Most (and Least) Expensive Cities for Renters in Canada
According to the Renters.ca report from November 2023, Vancouver tops the list with an average 1 bedroom rental $2,872 per month while Saskatoon is the least expensive city with an average 1-bedroom rents at $1,109 per month. Here're the top 5 most expensive and least expensive cities across Canada when it comes to renting a residential unit.
MOST EXPENSIVE:
- Vancouver, BC: The average rent for a 1-bedroom costs $2,872 and $3,777 for a 2-bedroom.
- Burnaby, BC: The average rent for a 1-bedroom costs $2,647 and $3,341 for a 2-bedroom.
- Toronto, ON: The average rent for a 1-bedroom costs $2,607 and $3,424 for a 2-bedroom.
- Oakville, ON: The average rent for a 1-bedroom costs $2,524 and $3,337 for a 2-bedroom.
- Mississauga, ON: The average rent for a 1-bedroom costs $2,352 and $2,851 for a 2-bedroom.
领英推荐
LEAST EXPENSIVE
- Saskatoon, SK: The average rent for a 1-bedroom costs $1,109 and $1,340 for a 2-bedroom.
- Regina, SK: The average rent for a 1-bedroom costs $1,191 and $1,405 for a 2-bedroom.
- Fort McMurray, AB: The average rent for a 1-bedroom costs $1,226 and $1,478 for a 2-bedroom.
- Red Deer, AB: The average rent for a 1-bedroom costs $1,249 and $1,464 for a 2-bedroom.
- Winnipeg, MB: The average rent for a 1-bedroom costs $1,282 and $1,692 for a 2-bedroom.
SOURCE: RENTALS.CA RENT REPORT
OUR TAKE
Well, it's no surprise that rents are high in Metro Vancouver and Greater Toronto pockets as these areas see the largest growth in population especially when you account for new immigrants, students, and overall economic environment. Unless the growth in population starts spreading out more evenly to other parts of the country, these core areas will continue to see a consistent rise in rental costs thus pushing more people to eventually buy than rent which in turn, keeps the property values higher as well.
ALMOST MADE THE CUT
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