Housing Optimism Is Back in Canada, Boosting Consumer Confidence
Monday Apr 24th, 2023
Canadians are growing more optimistic as the outlook for real estate steadily improves and the economy grinds ahead with few signs of an imminent recession.
(Bloomberg) — Canadians are growing more optimistic as the outlook for real estate steadily improves and the economy grinds ahead with few signs of an imminent recession.
The Bloomberg Nanos Canadian Confidence Index, a measure of sentiment based on weekly polling, rose to the highest level since June. The index was at 50.4 last week, the fifth straight increase. It began to rise sharply around the same time as the Bank of Canada officially paused interest rate hikes, in early March.
A Bloomberg Nanos score of 50 indicates that positive and negative views are about equal. The index’s lowest point in the past year was 42 in October.
The primary reason for the gains is a view that home prices have hit bottom: 75% of respondents said they expect prices will either rise or stay the same in the next six months. That’s the highest proportion since last June, and the fastest 10-week increase in more than two years.
The poll reflects what’s happening in the market. The national benchmark price for a home climbed 0.2% to C$709,000 ($524,000) in March, the first monthly increase a year.
What’s more, the Bank of Canada made a conditional promise in January to hold its benchmark rate at 4.5% if the economic outlook and inflation unwind in line with its forecasts. Concerns about the health of some US regional banks have also changed the outlook for interest rates. And a dearth of housing supply has led analysts to suggest housing will perk up in the second half of 2023, a sentiment shared by the central bank in its latest monetary policy report.
Canadians are also growing more optimistic about their own job security and their own personal finances, compared with four weeks ago. Forecasts for economic growth in 2023 have been upgraded by the central bank and by most economists after the first quarter came in stronger than expected.
Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security, the economy and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 telephone responses.