Foreign entities investing in the housing market.
An intersting article came about regarding the influx of foreign money into the housing market by CBC.http://www.cbc.ca/news/business/housing-market-regulations-1.3479818.
I am for regulating the market to foreign money for the following points:
The demand for housing is not related to dweling requirement but on investment requirement forcing the prices to go up; common Canadians would not be able to afford these prices resorting to renting and other non-permanent means of dwelling
Income from investment properties held by foreign entities are very unlikely invested back into Canada. There is a potential that the revenues generated leave the country - we have no laws to prevent this
As more foreign funds come into the housing market, sustainability of the whole market is now in the hands of entities who may chose to abandon or sell their investments. This will affect the whole market as people who opted to buy the property at a higher cost after saving their hard earned money would suffer from a devaluated house price.
Banks would be unclear as to the direction of these investment properties - they would not have any solid indicator if a default is emminent.
The idea of building house for local consumption or local use should be the priority and should be the focus of the housing market. If there is a large portion of houses owned by foreign entities being used to leverage on a quick and short term profit, it is then no different from the stock market where the later would have regulations on how a sale was done - on properties , you can dispose an asset when you want to. This is not sustainable in the long run.
Bank of Canada maintains overnight rate target at 1 ¾ per cent
The Bank of Canada today maintained its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 2 per cent and the deposit rate is 1 per cent.
Recent Canadian economic data are in line with the projections in the Banks April Monetary Policy Report (MPR), with accumulating evidence that the slowdown in late 2018 and early 2019 is being followed by a pickup starting in the second quarter. The oil sector is beginning to recover as production increases and prices remain above recent lows. Meanwhile, housing market indicators point to a more stable national market, albeit with continued weakness in some regions.
Continued strong job growth suggests that businesses see the weakness in the past two quarters as temporary. Recent data support a pickup in both consumer spending and exports in the second quarter, and it appears that overall growth in business investment has firmed. That said, inventories rose sharply in the first quarter, which may dampen production growth in coming months.
The global economy is also evolving largely as expected since April, although the recent escalation of trade conflicts is heightening uncertainty about economic prospects. In addition, trade restrictions introduced by China are having direct effects on Canadian exports. In contrast, the removal of steel and aluminum tariffs and increasing prospects for the ratification of CUSMA will have positive implications for Canadian exports and investment.
Inflation has evolved in line with the Banks April projection. The Bank expects CPI inflation to remain around the 2 per cent target in the coming months. Core inflation measures all remain close to 2 per cent.
Overall, recent data have reinforced Governing Councils view that the slowdown in late 2018 and early 2019 was temporary, although global trade risks have increased. In this context, the degree of accommodation being provided by the current policy interest rate remains appropriate. In taking future policy decisions, Governing Council will remain data dependent and especially attentive to developments in household spending, oil markets and the global trade environment.
Building permits up in Western Canada, down east of Manitoba
Four provinces reported increases in March, led by British Columbia with an increase of 12.8% (+$180 million). Meanwhile, all provinces east of Manitoba reported declines. The largest decrease was in Ontario, down 1.4% (-$43 million) due to lower construction intentions in the residential sector.
Quebec drives movement in non-residential permits. The national value of permits for non-residential buildings rose 7.9% in March, due to higher construction intentions for both institutional (+$175 million) and commercial (+$166 million) buildings. Gains in both of these components stemmed from Quebec. A high value permit for an addition to the Centre hospitalier de lUniversit de Montral drove the increase in the institutional component.
In the industrial component, the value of permits declined 15.6% in March (-$102 million). The decrease was largely the result of lower construction intentions in Quebec, where multiple high-value permits were issued in February.