Home markets to rally
The oil shock and the recent hit to the economy aside, Canada’s housing markets are going to continue their winning ways this year, new studies suggest.
But next year is a question mark.
Indeed, the latest study from Royal Bank of Canada projected 2015 could be one of the best years ever.
Home sales should rise 5 per cent this year to more than 505,000, with prices up 4.6 per cent, RBC said in today’s study.
“Canada’s housing market is poised to post one of its best years on record in 2015 despite the Canadian economy being hit by a significant negative shock (plunge in oil prices) and a spike in condo completions in some markets,” said RBC economists Craig Wright, Dawn Desjardins, Paul Ferley and Nathan Janzen.
“That said, strong momentum is not equally shared across the country, with home resale activity plummeting in oil industry-sensitive markets (Alberta and Saskatchewan) and soaring in the non-energy-intensive exporting provincves, Ontario and British Columbia,” they added.
Next year will bring a “slight easing,” however, RBC said.
Canada’s housing market is, of course, driven by the hot cities of Toronto and Vancouver.
While RBC projected a mild pullback, Toronto-Dominion Bank forecast a “mild correction in the housing market in 2016/2017.”
Markets tumble
Investors are in a frightful mood today, driving stocks down sharply across the globe.
Tokyo’s Nikkei is closed today, but Hong Kong’s Hang Seng gained 0.2 per cent and the Shanghai composite 0.9 per cent.
But stocks in Europe and North America fell sharply.
“The weakness seen since Thursday’s Federal Reserve decision is highlighting a high possibility that we are due to embark on yet another major selloff in global indices,” said IG market analyst Joshua Mahony.
“Gone are the days of bad news is good news. Now even traditionally good news for markets is deemed another reasons to sell and it makes you wonder what the response will be to an eventual [Fed rate] hike.”
VW whacked again
As IG’s Mr. Mahony put it, the “wheels have fallen off for Volkswagen.”
The auto maker’s shares sank again today amid the widening scandal over emissions tests in the United States, possibly affecting 11 million cars.
VW also said today it is now setting aside more than $7-billion (U.S.) to deal with the problem.
“The issue here is one of reputation, and coming from a rich pool of reputable and reliable German car makers, this could take the sheen off a previously untouchable industry,” Mr. Mahony said.
“Today’s selloff across the German automotive sector has seen competitors such as Audi, Renault, Daimler and Porsche all suffer major losses today.”
VW has apologized for fixing vehicle emissions tests in the United States via a software program, and certain sales have been halted.
Stubborn unemployment
Canada’s next government faces a crucial challenge: Easing a stubbornly high unemployment rate.
While Canada’s labour market bounced back early from the depths of the recession, job-creation of late has been moderate, and unemployment has crept back to 7 per cent.
And it’s going to stick close to that level until at least the end of 2017, a new study projects.
Canada’s jobless rate, which had eased to 6.7 per cent earlier this year, is now projected to average 6.9 per cent this year and next, slipping to a still-elevated 6.7 per cent in 2017, Toronto-Dominion Bank warned in a new forecast.
The TD study sees the jobless rate still at 7 per cent in the final quarter of this year, 6.8 per cent by late 2016 and 6.6 per cent in the last three months of 2017.
Having said that, the jobs market has “remained surprisingly resilient” this year given the sluggish economy, said TD chief economist Beata Caranci, deputy chief economist Derek Burleton and economist Brian DePratto.
“Employment gains have averaged roughly 12,000 positions per month,” they said.
“We expect there to be some short-term payback in employment, as declines in output tend to have a lagged relationship with the labour market. That said, net gains in employment of about 7,000 per month are still expected through the remainder of the year, sufficient to keep the unemployment rate at around 6.9 per cent.”