Rising real estate prices and low interest rates keep Canadian households upbeat
The share of Canadians who are predicting higher home prices in their neighborhood remained above 40% for a fifth week in the latest weekly polling by Bloomberg and Nanos Research. That’s kept consumer confidence levels at near the highest in four years, the data show.
Improving views on housing follow a recent acceleration in the real estate market in recent months that reflects a shift by policy makers at the Bank of Canada to dim expectations for rate increases as it plays down concerns over rising household debt to focus on stimulating the economy.
“The crux of it is the rates environment,” said David Tulk, chief macro strategist at TD Securities. “It’s that combined impact of seeing your own asset increase but also realizing that no one is going to take away the punch bowl.”
The Bloomberg Nanos Confidence Index measured 59.6 in the week ended May 16, little changed from the previous reading of 59.5. The survey-based index hit a four-year high of 60.1 on April 25. The index is calculated on scores derived from weekly polls on the outlook for real estate prices, personal finances, job security and the Canadian economy.
The proportion of survey respondents who believe home values in their neighborhood will rise over the next six months was at 40.7% last week. While down from 42.8% two weeks ago, the score has averaged 41.9% over the past five weeks, up from an average 37.3% over the past year. The share of Canadians who expect a decrease in real estate prices fell to 9.7% last week, the lowest since January.
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