Wednesday, January 31, 2018

Canadian Monthly GDP (November) - January 31, 2018

The Canadian economy posted 0.4 per cent growth on a monthly basis in November, with 17 of 20 industrial sectors reporting increased output.  The manufacturing sector posted its strongest growth in three years and the real estate industry grew for a fourth consecutive month, led by a surge in the output of real estate agents and brokers. Given today's release, growth in the Canadian economy is tracking at 2.5 per cent for the fourth quarter, an uptick from 1.7 per cent growth in the third quarter. 

Today's data, along with firming inflation in recent months, further supports the case for gradual tightening by the Bank of Canada in 2018.


Monday, January 29, 2018

How over 46,000 wealthy immigrants took a back door into Vancouver and Toronto’s housing markets

Over 46,000 wealthy immigrants took a back door into Vancouver and Toronto’s housing markets over the past three decades, according to custom Census data obtained exclusively by Global News.
That back door is the Quebec Immigrant Investor Program (QIIP).
Established in 1986, it offers permanent residency to international business people with net assets of at least $1.6 million, who make an interest-free investment of $800,000 in la belle province — and the government returns their money after five years.
Applicants are supposed to settle in Quebec.
But data shows just how many of them have ended up elsewhere – leaving Quebec with their investments, other provinces with their health care bills, and cities with flows of foreign capital that have been linked to soaring home prices.The data, which includes both primary and secondary applicants, showed that 57,935 investor immigrants who came through Quebec were living in Canada as of 2016.
Nearly 28,000 of them (48.3 per cent) were living in B.C., while almost 22,000 (37.9 per cent) were in Ontario.
Only 6,050 investor immigrants who came through Quebec (10.4 per cent) were living in the province at that time.Vancouver was a major recipient of investor immigrants. The data showed 27,080 (46.7 per cent of the total) living in the Vancouver region as of 2016, with 8,590 (14.8 per cent) in the City of Vancouver, 6,835 (11.8 per cent) in Richmond and 3,160 (5.5 per cent) in Burnaby.
Meanwhile, in Ontario, there were 19,265 (33.3 per cent) investor immigrants in the Toronto area. Major destinations within that region included the City of Toronto (8,760), Markham (3,510), Richmond Hill (2,355) and Mississauga (2,060).
By contrast, there were 5,660 investor immigrants in the Montreal region, and very few in any of Quebec’s other Census Metropolitan Areas (CMA).As permanent residents, no foreign buyers taxes can touch these people. Nor can any measure to curb foreign demand in Canadian real estate.
The numbers didn’t surprise Josh Gordon, an SFU public policy professor who has focused on Toronto and Vancouver’s housing markets.
“There has been kind of insider accounts that suggest this is what’s been going on,” he said of QIIP applicants settling outside Quebec.
“To have this data that confirms this should put extra pressure on governments to address this awful program.”
Gordon described the QIIP as a “farce,” saying that Quebec benefits from the program while other jurisdictions incur the costs of hosting wealthy immigrants in their provinces.
“The Quebec government receives an interest-free loan, while the house price pressures and the social service costs of supporting investor immigrant families, who have historically paid low amounts of tax, falls on British Columbia and Ontario,” he said.

A pipeline funneling foreign billions into B.C.

Estimates of where these households came from have varied over the years.
In the mid-1990s, investor immigration to Canada, which came both through Quebec and the cancelled federal Immigrant Investor Program (IIP), was dominated by applicants from Hong Kong and Taiwan.
From 2007 to 2011, the country of last residence for 86.8 per cent of principal applicants to the IIP was in Asia, Australia or the Pacific, according to a federal report.
UBC geographer Daniel Hiebert, who has focused on international migration, said investor immigration is likely now dominated by applicants from Mainland China.
The federal report also showed that investor immigrants are heavily invested in real estate.

Here’s another way to look at just how unaffordable Vancouver housing has becom

A new international survey by Demographia shows that Vancouver experienced the greatest deterioration in affordability last year among major global housing markets.
As of the third quarter of 2017, Vancouver ranked third for the worst middle-income housing affordability out of 92 major housing markets across the globe, according to the 14th Annual Demographia International Housing Affordability Survey, published on Sunday.
Through the survey’s 14-year history, only Hong Kong and Sydney have recorded affordability levels worse than Vancouver’s.“Vancouver had already developed a severely unaffordable housing market in the first Survey (2004), which has been associated with its urban containment policy, adopted about five decades ago,” authors Wendell Cox and Hugh Pavletich write in the report.
The annual survey rates middle-income housing affordability using the “median multiple,” which is the median house price divided by the median household income. The survey covers 293 metropolitan housing markets, including 92 major markets from a total of nine countries.
With a median multiple of 12.6, Vancouver ranks as the third most unaffordable market in the survey, following Hong Kong (19.4) and Sydney (12.9).
A median multiple of 3 and under is considered affordable, whereas a rating of 5.1 and over is considered severely unaffordable.Out of all markets surveyed, Vancouver experienced the highest level of housing affordability deterioration with its median multiple rising by more than 2.35 times, from 5.3 in 2004 to 12.6 in 2017.  
Demographia says this increase is comparable to 7.3 years of pre-tax median household income.
Toronto made the list as Canada’s second least affordable market, with a median multiple of 7.9, compared to 3.9 in 2004.
Overall, Canada’s six major markets — Toronto, Montreal, Vancouver, Ottawa, Calgary and Edmonton — have a median multiple of 4.3.
Of all 46 Canadian housing markets included in the survey, Moncton, New Brunswick ranked as the most affordable market in Canada for the sixth year in a row with a median multiple of 2.1.

buzznews canada

BCREA ECONOMICS NOW Canadian Inflation - January 26, 2018

Canadian inflation, as measured by the Consumer Price Index (CPI), slowed slightly in December to 1.9 per cent year-over-year, down from 2.1 per in November. Excluding the price of gasoline, inflation was just 1.5 per cent. The Bank of Canada's three measures of trend inflation continue to trend close to 2 per cent. In BC, provincial consumer price inflation was 2.0 per cent in the 12 months to December.
While it did cool in December, inflation in Canada is now pushing up against the Bank of Canada's 2 per cent target after remaining fairly muted for much of the last year. Today's release shows a general firming of inflation around 2 per cent which, if sustained, will mean further rate increases from the Bank this year.

BCREA ECONOMICS NOW Canadian Retail Sales - January 25, 2018

Canadian retail sales increased for a third consecutive month in November, rising 0.2 per cent on a monthly basis and 6.5 per cent year-over-year. Sales were higher in 6 of 11 sub-sectors representing 37 per cent of total retail trade. Excluding the decline in new motor vehicle sales, retail sales were up 1.6 per cent over October. Given today's data release, we are tracking Q4 2017 Canadian economic growth at 2.4 per cent.
In BC, retail sales were essentially unchanged on a monthly basis but were 11.5 per cent higher than November 2016. Year-to-date, retail sales in the province have grown 9.7 per cent, reflecting strong job and robust economic growth in the province. We forecast that the BC economy grew close to 4 per cent in 2017 and will enter 2018 with significant momentum.

Vancouver realtors say strong condo demand persists despite stricter mortgage rules and interest rate hikes

There’s no slowing demand for condos in Metro Vancouver’s hot market, at least for now.
According to two Vancouver realtors, the market continues to show its strength, despite stricter mortgage regulations that came into effect this year and higher interest rates.
“The changes that have been brought in with respect to mortgage qualification, and even the recent announcement on the interest rate hike from the Bank of Canada, don’t seem to be fazing anybody,” Vancouver realtor Aaron Jasper tells BuzzBuzzNews.
As of January 1, the Office of the Superintendent for Financial Institutions’ (OSFI) new mortgage qualification stress test came into effect. All uninsured mortgage borrowers are now required to qualify against the Bank of Canada’s five-year benchmark rate, or at their contract mortgage rate plus an additional two per cent.
When news about the stress test broke in October 2017, many buyers appeared to rush into the market ahead of the New Year.
In December 2017, residential sales in Greater Vancouver were up 17.6 per cent compared to a year ago, according to the Real Estate Board of Greater Vancouver (REBGV).
Although it has been almost a month since the introduction of OSFI’s stress test, Vancouver realtor Adil Dinani says momentum has continued from last year into 2018, particularly in the condo segment.
“While the stress test may have taken a bit of steam out of the market, there was such a strong wave going into 2018 that it would take something substantial to cool that end of the market down,” Dinani tells BuzzBuzzNews.
In addition to tighter mortgage regulations, the Bank of Canada increased the overnight rate, which influences mortgage rates, on January 17th for the third time since July 2017. The rate now sits at 1.25 per cent.But this multitude of headwinds is not appearing to have an impact on the market yet, says Jasper.
“It’s very competitive and the condo market in particular in Vancouver just seems to be business as usual, as crazy as it was last year,” notes the realtor.
However, fierce demand continues to be met by limited supply in the region.
With buyers flocking to the condo segment, prices are continuing to rise, says Dinani.
According to REBGV, as of December 2017, the benchmark price of a condo in Greater Vancouver was $655,400, up roughly 26 per cent from December 2016.
Going forward, Jasper expects momentum to continue in the condo segment, however another property type might lead demand this year.
“It’s very competitive in the condo market, but even that much more competitive in townhouses and duplexes,” he says.