Real Estate Outlook Lifting Canadian Consumer Confidence

Real Estate Outlook Lifting Canadian Consumer Confidence

July 6, 2014 in Vancouver Real Estate News

Bloomberg’s Nanos Canadian Confidence Index climbed to 59.9 for the week ended 27th June 2014, due largely in fact to confidence in Canadian Real Estate. This figure represented an almost 1.2% increase over the past period that reported a figure of 58.5.

A key figure – the amount of Canadians that believe their house price will rise over the next six months hit 44.1%. This was the highest figure since Q4 2009.

Job security sentiment was reduced, but the figures are bolstered by optimistic views on personal finances and the economy as a whole.

“Looking at the key drivers of consumer sentiment over the past six years, it is clear that positive views of real estate is a key factor in Canadian consumer confidence,” said Nik Nanos, chairman of Ottawa-based polling firm Nanos Research Group. Sentiment about real estate is “noticeably” above its six-year average, while personal-finance views are “marginally” below the average for the period, he said.

Canadian Realtors notched up their biggest sales gain last month, eclipsing the past four years (CREA – June 16th).

New home construction also increased in May 2014, following a slump during Q1 2014 (CMHC – June 9th).

Homebuilding in Canada

The current BOC Governor Stephen Poloz, who replaced Mark Carney as he took over the Bank of England last year predicts that the largest domestic risk to the country’s finance system is that of overstretched households following rapid new construction. He also cites a soft landing with respect to Canada’s housing market, and also sees progress with Europe easing it’s debt crisis.

The harsh winter stunted Canada’s housing construction along with exports and business spending, and as a result the economy expanded less than forecasted during the month of April. Benchmark interest rates should remain at 1% accruing to Poloz, citing “modest” economy growth.

Personal Finance

The Pocketbook Index, which looks at questions relating to Personal Finances and Job Security rose slightly from 58.9 to 59.8, and those who have reported that they feel their finances have improved since last year rose 0.6% from 17% to 17.6%

On the flip side the proportion of people who feel secure about their jobs dropped to 68.6%, which represents a decline from May 30th 2014 where the figure stood at 69.2%.

“A modest pickup in overall economic activity appears to have bolstered consumer sentiment,” said Joseph Brusuelas, senior economist at Bloomberg LP, “However, Canadians remain concerned about their own personal financial condition, which is reflective of the household imbalances that remain a pressing policy challenge.”

During April 2014 goods production fell in Canada, while the service industries, such as wholesaling expanded, resulting in less overall GDP growth than expected.

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