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Briefing highlights

  • Canada falls in housing ranking
  • Stocks, loonie, oil at a glance
  • Retail sales dip in January
  • Inflation inches up in February
  • From today’s Globe and Mail

Canada tumbles

Canada has lost its perch in global housing markets, tumbling in the most recent rankings.

This is what policy-makers wanted to happen as they moved at the federal level and in British Columbia and Ontario to bring down household debt levels and cool markets.

A report this week from Knight Frank put Canada in 39th place in the fourth quarter of 2018, with annual price growth of 2.5 per cent.

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That was down from 10th place a year earlier, when annual price growth came in at almost 9 per cent, though up marginally from the 44th spot, at 2.1 per cent, in the third quarter of 2018.

Knight Frank global house price index, Q4 2018

Percentage change

RankCountry12-month change6-month change3-month change
1Slovenia15.1%6.3%1.9%
2Malta***11.82.21.2
3China (mainland)10.76.82.8
4Hungary10.47.03.5
5Mexico9.95.20.3
6Turkey9.73.41.7
7Czech Republic***8.75.42.4
8Latvia8.63.20.1
9Netherlands8.43.30.7
10Singapore****8.30.50.5
11Colombia8.13.51.4
12Austria8.03.52.8
13Slovakia7.62.22.1
14India7.22.43.2
15Luxembourg6.92.81.9
16Chile6.94.61.9
17Iceland6.93.01.3
18Croatia6.82.62.8
19Ireland6.52.0-0.2
20Bulgaria6.33.60.8
21Portugal6.13.41.2
22Hong Kong**5.9-4.0-6.2
23Romania5.72.4-0.7
24Lithuania5.4-2.1-4.2
25Germany5.43.62.1
26Russia4.92.51.8
27United States4.70.5-0.2
28Estonia4.21.30.2
29South Africa4.02.10.4
30Spain3.91.91.8
31New Zealand3.71.00.8
32Jersey3.61.30.4
33France3.31.70.6
34South Korea3.22.10.9
35Indonesia3.00.80.4
36Denmark3.01.4-0.4
37Peru2.93.1-1.2
38Belgium2.63.12.1
39Canada2.50.1-1.0
40Britain2.51.1-0.4
41Greece2.41.91.0
42Norway2.3-3.4-2.3
43Japan1.9-2.1-2.0
44Cyprus1.70.90.3
45Taiwan1.4-1.8-2.7
46Malaysia1.10.5-0.5
47Ukraine0.70.70.0
48Poland0.3-0.2-1.0
49Switzerland-0.10.0-0.8
50Brazil-0.4-0.2-0.1
51Morocco-0.8-0.4-0.3
52Italy-0.8-0.2-0.8
53Sweden**-1.50.50.0
54Australia-1.9-2.2-1.5
55Israel-2.1-0.2-1.1
56Finland-2.9-2.3-2.4

SOURCE: KNIGHT FRANK; Notes: ** Provisional ***Asking prices **** Island-wide price index for non-landed properties. Data for Australia, Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, Germany, Greece, Hungary, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Malaysia, Morocco, New Zealand, Poland, Romania, Slovenia, South Africa is to Q3 2018; data for Cyprus and India is to Q2 2018.

“Home prices are adjusting to rising interest rates, stricter mortgage lending rules and a weaker economic outlook,” said Kate Everett-Allen, partner, residential research at the consulting group.

In some Canadian markets, she added, “the persistence of cooling measures alongside slower wage growth is also influencing buyer sentiment.”

Canadian markets were hit by the federal bank regulator’s new mortgage stress tests, which came into effect in early 2018, coupled with measures from the B.C. and Ontario governments aimed at stopping a bubble from bursting in overpriced cities like Toronto and Vancouver.

Now, as The Globe and Mail’s Janet McFarland and James Bradshaw report, Finance Minister Bill Morneau introduced measures in his budget Tuesday to help some buyers get into the market.

But the program isn’t expected to juice those markets all that much.

“From a forecast perspective, these policies will likely do little to move the dial if implemented,” said Toronto-Dominion Bank economist Rishi Sondhi.

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“Indeed, our modelling suggests that home sales could be about 3 per cent higher than previously anticipated by the end of 2020, resulting in a similar or slightly lower lift to prices,” he added.

“However, these policies would likely have outsized price impacts in markets that are already tight. Of note, implementation of these programs would result in higher future home prices, paradoxically worsening affordability conditions for future [first-time home buyers].”

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Markets at a glance

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Sales dip

Canada’s retailers suffered another down month in January, the third in a row, but it had to do more with prices than volumes.

Retail sales fell 0.3 per cent in the month, Statistics Canada said today, largely because of lower sales at auto and parts dealers.

If you strip out price changes, though, volumes were flat.

“After a weak December, there was at least some hope for January retailing in Canada, but hopes that didn't pan out in the data today,” said CIBC World Markets chief economist Avery Shenfeld.

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“All told, the first disappointing figure for January GDP,” he added.

Separately, Statistics Canada reported that annual inflation inched up in February to 1.5 per cent from January’s 1.4 per cent.

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