Bank of Canada Interest Rate Announcement - October 28, 2020
The Bank of Canada held its overnight rate at 0.25 per cent this morning, a level it considers its effective lower bound. The Bank is also continuing its quantitative easing (QE) program, though re-calibrated to target longer-term bonds and slightly scaled back from purchasing $5 billion per week in Government of Canada bonds to $4 billion per week. The Bank also reiterated forward guidance on future interests moves, committing to holding the policy rate at 0.25 per cent until slack in the economy is absorbed and inflation is sustainably trending at 2 per cent. In the statement accompanying the decision, the Bank noted that the Canadian economy is recovering, though at a highly
Canadian inflation, as measured by the Consumer Price Index (CPI) rose by 0.5% in September year-over-year, up from the previous month's increase of 0.1%. Excluding gasoline, the CPI rose by 1.0%. Prices rose in six of eight components year-over-year with notable increases in shelter (1.7%), food (1.6%), and health/personal care (1.6%), while prices declined for clothing/footwear (-4.1%) and recreation (-1.2%). Growth in the Bank of Canada's three measures of trend inflation was flat in September, averaging 1.7%.
Regionally, the CPI was positive in seven provinces. In BC, CPI rose by 0.4% in September year-over-year, up from August's increase of 0.2%. Prices continued to rise for
BCREA is the professional association for more than 23,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research, and standard forms to help REALTORS® provide value for their clients.
To demonstrate the profession's commitment to improving Quality of Life in BC communities, BCREA
Vancouver, BC – October 14, 2020. The British Columbia Real Estate Association (BCREA) reports that a total of 11,368 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in September 2020, an increase of 63.3 percent from September 2019. The average MLS® residential price in BC set a monthly record of $803,210, a 15.3 percent increase from $696,647 recorded the previous year. Total sales dollar volume in August was $9.1 billion, an 88.3 percent increase over 2019.
“The provincial housing market had a record-setting September,” said BCREA Chief Economist Brendon Ogmundson. “Both total sales and average prices were the highest ever for the month of September as pent-up
Canadian employment gained 378.2k jobs in September (2.1%, m/m), following a gain of 245.8k in August. This is the fifth consecutive month of increases, putting national employment within 719.5k of its pre-COVID February level. The national unemployment rate fell by 1.2 percentage points to 9% from the previous month. Gains in the services-producing sector were driven by accommodation/food, educational services, and information/culture/recreation, while manufacturing led the increase in the goods-producing sector. Compared to the same month last year, Canadian employment was down by 3.6% (-685k).
Regionally, employment increased in all provinces except in New Brunswick and PEI, with the
The Vancouver Island Real Estate market continued strong with 1,287 total sales in September 2020 in the VIREB board area (excluding Victoria) an 86% increase compared to the same month the previous year. Many of the sales are still taking place in the single-family home segment but condo’s and townhomes are seeing hefty increases in sales volume as well.
Sales of single-family homes were up a whopping 98.5% year over year with 643 of the sales being in that segment in Septemeber. Condos increased in sales year over year by 46% (a significantly higher jump than Victoria condos) and townhome sales jumped 28% in the same Septemeber year over year comparison. While sales are up across the whole island, including Victoria, it is worth noting that luxury
The Victoria Real Estate market continued red hot through September. Driven by strong demand from buyers, especially for single-family homes there was a massive 60.6% increase in total sales volume in September 2020 compared to the same month last year. With 989 units sold in the Victoria Board area, 1% more than the record high previous month, inventory simply can’t keep up.
For a more shocking number, we can look at single-family homes specifically, which were up 91.9% compared to the same month last year with 539 homes sold in September! Condos had a more modest bump in sales volume at 26.7% up year over year with 280 unit sales. Although Condos lag behind in sales, for now, there is a good chance we will see this market segment increase in the
Canadian housing starts decreased by 20% m/m to 208,980 units in September at a seasonally adjusted annual rate (SAAR), following a strong gain of almost 262,000 units in August. This is the first decline after four consecutive months of increases, which was driven by declines in the multi-unit segment in Ontario and BC. The decline was broad-based, where starts were down in 8 provinces. September's still healthy number increased the six-month average to 214,647 units SAAR.
In BC, housing starts decreased by 25% m/m to 32,279 units SAAR in September, following a robust increase of 43,322 in August. This rounded out the third quarter average to 38,662 units SAAR. In the near term, we can
BC Monthly Real GDP Estimate for July 2020 & Preliminary Estimate for August 2020 (Updated: September 30, 2020)
The BCREA Nowcast estimate of provincial economic growth (expressed as year-over-year growth in real GDP) for July is -4 per cent. For comparison, the Canadian economy contracted 4.9 per cent year-over-year in July.
We have also included a preliminary estimate for August 2020 of -3.2 per cent. While year-over-year growth remains negative, the rate of decline is slowing as the economy continues to improve on a monthly basis.
Canadian Monthly Real GDP (July) - September 30, 2020
Canadian real GDP grew 3 percent in July, following a record 6.5 percent increase in June. However, even after three consecutive months of strong growth, the Canadian economy remains about 6 percent below its pre-pandemic level of output. All 20 Canadian industrial sectors posted increases in July, with the real estate sector surpassing its pre-pandemic level of GDP.
Statistics Canada's preliminary estimate for August's real GDP growth is 1 percent, which means that third-quarter real GDP growth is currently tracking at close to 10 percent, or about 40 percent on a quarterly annualized basis. Still, even that unprecedented level of growth would still leave the Canadian economy about
