It’s time for a cheat sheet on this week’s top stories.
canadian real estate
Canada’s real estate bubble is unusual compared to other G7 countries
Canada’s real estate prices are unparalleled in the developed world. New data from the US Federal Reserve shows Canadian home prices are rising at a much faster pace than other G7 countries. Despite the recent growth being driven by population, the problem is older than the recently adopted narrative. Since 2005, Canadian home prices have grown more than twice as much as any other G7 country.
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Canada’s real estate market has improved, but prices are still falling: BMO
Canadian real estate sales increased, but not enough to stop prices from falling. While home sales in December increased by 8.7% from the previous month, new listings decreased. Despite the gradual tightening, prices continued to fall, falling by a further 0.8% in December. This is the fourth month of falling house prices, and at least one bank predicts prices will continue to fall further this year despite improved sales.
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Bank of Canada to keep interest rates on hold next week, reversing rate cuts – RBC
The Bank of Canada (BoC) is unlikely to change interest rates next week, but that doesn’t mean there won’t be some turbulence. RBC, Canada’s largest bank, is watching the announcement for any clues. This time last year, central banks were overly enthusiastic about developments on inflation. Ironically, this frenzy prompted consumers to buy big, which led to further rate hikes. Ideally, you won’t make the same mistakes again.
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Canadian mortgage rates likely to rise again as bond yields soar
Yields on Canadian government bonds have fallen, contributing to the supply of cheap mortgage financing. Government of Canada (GoC) five-year bond yields peaked in October and fell by nearly one percentage point by year-end. This rate has a direct impact on five-year fixed rate mortgages, which have also fallen by roughly the same level as interest rates have fallen. But it has increased sharply over the past week, with nearly a third of his progress regressing. Mortgage rates have yet to adjust after the spike, but that doesn’t mean they won’t.
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Inflation accelerates in Canada as moderate recession begins
Canada has seen only minor setbacks in progress in combating inflation. The latest CPI data shows a modest acceleration, which is the opposite of what the BoC had expected. This trend shows that inflation is a much more troublesome problem than many people think. It is also possible that central banks will be cautious in expressing how much progress is being made.
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