Canadian House Prices Grow At A Slower Pace
Canadian house price inflation is moderating somewhat according to the latest data just published by Statistics Canada. The New House Price Index for the month of September has once again expanded but this month’s rise is marginal by recent standards. The latest month on month reading is showing growth of just 0.1% in comparison to the August recording of 0.3% expansion, the consensus estimate for today’s report was for a rise of 0.2%. Despite the monthly fall, the year on year New House Price Index has however picked up, due mainly to the falling away of a low growth month last year, this now stands at 1.6% compared to a reading of 1.5% taken in August, market analysts had anticipated the reading to reach 1.7% today.
The cooling in new house price growth is in keeping with a general feeling of slowing in the Canadian economy. On a positive note the gradual pace of growth moderation in the real estate sector increases the chances of a soft landing in this space. Despite recent concerns around the pace of cooling in the Canadian economy as a whole, it appears, at least to the government that the economy might be in better shape than commentators have been predicting. Canada’s Finance Minister, Joe Oliver, yesterday announced an upgrading of growth forecasts for the economy from 2.3% to 2.4% this year and from 2.5% to 2.6% next year. These growth upgrades are in contrast to the OECD’s recent downgrading of forecasts for the Canadian economy.
The true growth path probably lies somewhere in between but the governments case will be helped by an unexpected budget surplus that was also projected by Mr. Oliver in the Finance Minister’s annual update on the state of the Canadian economy. It was feared that plummeting oil prices would take a significant toll on the tax receipts from this sector but it transpires that this taxation shortfall is going to come in much less than initially anticipated.
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