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Reuters
10 hours ago
- Business
- Reuters
Canada home prices to decline 2% as trade war hits homebuyer confidence
BENGALURU, June 26 (Reuters) - Canada home prices are set to decline 2% this year and stagnate in 2026, a significant downgrade from expectations of modest rises just three months ago, according to a Reuters poll of property experts who showed significant concern over the U.S.-led trade war. Like most segments of the economy, the housing market has been dented by U.S. President Donald Trump's barrage of tariffs on steel, aluminum and automobiles and Canada's own set of duties in retaliation. Fears of job losses due to worsening business sentiment have dragged home buyers' confidence. That, along with increasing supply, has led to an around 3% decline in average house prices so far this year. The Bank of Canada's swift 225 basis points of interest rate cuts over the past year have prevented a deeper slump. Also, sales were up last month partly due to improving affordability, mainly among first-time homebuyers. Average home prices will fall 2.0% nationally this year, according to the June 13-25 Reuters poll of 16 housing market experts, in contrast to a prediction of a 2.0% rise in a March survey. "Uncertainty (around U.S. policies) has definitely paralysed the housing market, and it's done more than that. It's also affected businesses in terms of their capital spending plans and their hiring. Buyers are concerned about job security and being able to afford a house, so they're on the sidelines," said Tony Stillo, director of Canada economics at Oxford Economics. "Looking forward, if there's a modest trade war could deepen the downturn and extend it through end-2025." Average home prices are now expected to stagnate next year, compared to a 3.4% rise predicted just three months ago. Home prices in Toronto are predicted to fall 4.0% and 2.0% in Vancouver, respectively, in 2025. Still, expected price falls are shallower compared with how much they have already been reported down so far this year, suggesting a modest recovery ahead. Expectations of at least one more rate cut this year may also put a floor under the market. "We expect home prices, though likely to weaken over the next two or three months, to stabilise later this year and then to resume moderate recovery in 2026," said Sal Guatieri, senior economist at BMO Capital Markets. "Now that's all predicated on two things. One, the trade war de-escalates and two, the BoC will resume cutting interest rates - we believe by a further 75 bps reduction by early next year." Most respondents, 10 of 12, said affordability would improve for first-time homebuyers over the coming year. Average home prices are still over 10 times the average annual income. Asked about the supply of affordable homes over the coming year, 10 said it would increase marginally compared to 2024 and one said increase significantly. "We expect affordability will continue to improve, but only modestly. It could maybe reverse half of the loss during the pandemic, but still not going to be back to what it was before the pandemic," said Robert Hogue, assistant chief economist at RBC. "Hopefully, lower building costs or some efforts to reduce regulatory fees will help out at the it probably would need more than that. We need some more transformational changes to really make a difference." (Other stories from the Q2 global Reuters housing poll)
Yahoo
10 hours ago
- Business
- Yahoo
Canada home prices to decline 2% as trade war hits homebuyer confidence
By Indradip Ghosh and Mumal Rathore BENGALURU (Reuters) -Canada home prices are set to decline 2% this year and stagnate in 2026, a significant downgrade from expectations of modest rises just three months ago, according to a Reuters poll of property experts who showed significant concern over the U.S.-led trade war. Like most segments of the economy, the housing market has been dented by U.S. President Donald Trump's barrage of tariffs on steel, aluminum and automobiles and Canada's own set of duties in retaliation. Fears of job losses due to worsening business sentiment have dragged home buyers' confidence. That, along with increasing supply, has led to an around 3% decline in average house prices so far this year. The Bank of Canada's swift 225 basis points of interest rate cuts over the past year have prevented a deeper slump. Also, sales were up last month partly due to improving affordability, mainly among first-time homebuyers. Average home prices will fall 2.0% nationally this year, according to the June 13-25 Reuters poll of 16 housing market experts, in contrast to a prediction of a 2.0% rise in a March survey. "Uncertainty (around U.S. policies) has definitely paralysed the housing market, and it's done more than that. It's also affected businesses in terms of their capital spending plans and their hiring. Buyers are concerned about job security and being able to afford a house, so they're on the sidelines," said Tony Stillo, director of Canada economics at Oxford Economics. "Looking forward, if there's a modest trade war could deepen the downturn and extend it through end-2025." Average home prices are now expected to stagnate next year, compared to a 3.4% rise predicted just three months ago. Home prices in Toronto are predicted to fall 4.0% and 2.0% in Vancouver, respectively, in 2025. Still, expected price falls are shallower compared with how much they have already been reported down so far this year, suggesting a modest recovery ahead. Expectations of at least one more rate cut this year may also put a floor under the market. "We expect home prices, though likely to weaken over the next two or three months, to stabilise later this year and then to resume moderate recovery in 2026," said Sal Guatieri, senior economist at BMO Capital Markets. "Now that's all predicated on two things. One, the trade war de-escalates and two, the BoC will resume cutting interest rates - we believe by a further 75 bps reduction by early next year." Most respondents, 10 of 12, said affordability would improve for first-time homebuyers over the coming year. Average home prices are still over 10 times the average annual income. Asked about the supply of affordable homes over the coming year, 10 said it would increase marginally compared to 2024 and one said increase significantly. "We expect affordability will continue to improve, but only modestly. It could maybe reverse half of the loss during the pandemic, but still not going to be back to what it was before the pandemic," said Robert Hogue, assistant chief economist at RBC. "Hopefully, lower building costs or some efforts to reduce regulatory fees will help out at the it probably would need more than that. We need some more transformational changes to really make a difference." (Other stories from the Q2 global Reuters housing poll) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-06-2025
- Business
- Yahoo
58% of U.S. imports exempt from Canada's retaliatory tariffs, says new report
Almost 60 per cent of imports from the United States hit by Canadian counter levies are now eligible for relief, representing a 'significant dilution of Canada's tariff response,' says a new report. Oxford Economics Ltd. estimated that 58 per cent of U.S. imports subject to retaliatory tariffs could be eligible for temporary relief from $96 billion in duties, which many economists had warned would lead to rising inflation and slowing economic growth. 'While this (new estimate) is higher than our initial estimate of an effective reduction in Canada's counter tariffs to nearly zero, it's still a significant dilution in Canada's tariff response that will lessen the hit to the economy and rise in prices from the trade war,' Tony Stillo, Oxford director of Canada Economics, and economists Michael Davenport and Sebastian Herrador-Guzman said in the report. They now believe that more than $20 billion of the $60 billion in non-automotive products hit with Canadian counter tariffs are eligible for relief until Oct. 16, though there remains a 'degree of uncertainty about what qualifies.' However, the 12-month tariff relief on Canada-U.S.-Mexico Agreement-compliant vehicles for automakers that continue to produce and complete planned investments in Canada 'appears more clear-cut,' they said, adding they believe the $36 billion in automotive counter tariffs imposed on April 9 are likely 'fully exempt.' 'A large portion of primary and fabricated metals products are eligible for relief – a significant reprieve for Canadian manufacturers,' they said. Most counter-tariffs on consumer products such as food, alcohol, appliances, furniture, clothing, and computers remain. Oxford's latest estimates are a significant change from its report in early May that suggested Ottawa was dropping tariff relief on U.S. imports to 'nearly zero' with some exceptions. 'More clarity on tariff relief eligibility lowers our initial estimate that nearly all counter tariffs were effectively paused for six months,' the economists said. Canada's retaliatory tariffs started on March 4 when it imposed a 25 per cent levy on $30-billion worth of U.S. consumer goods, eventually ramping that up to include aluminum and steel, non-CUSMA-compliant autos and American content in CUSMA-compliant vehicles. Ottawa on March 4 also issued its first order that allowed importers to request tariff relief on a case-by-case basis. In April, the government expanded the 'pool of products' eligible for relief before providing more clarity on the rules in a May 20 release. What is the 'TACO' trade and why is Trump so upset about it? Stillo, Davenport and Herrador-Guzman think the updated May 20 notice remains open to interpretation, particularly for goods related to health care, public health, public safety and national security. The federal government's latest order said companies in those sectors can seek tariff relief. It also covers imports of goods used in manufacturing, processing and food and beverage packaging. • Email: gmvsuhanic@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
National Post
18-05-2025
- Business
- National Post
Most tariffs on U.S. still active, Champagne says in contrast to Oxford Economics report
Canada's finance minister said the government kept 25 per cent retaliatory tariffs on tens of billions of dollars in U.S. goods, disputing a report from a research firm that suggested it had paused the vast majority of those levies. Article content Article content Francois-Philippe Champagne said 70 per cent of the counter-tariffs implemented by Canada in March are still in place, according to a social media post Saturday. The government 'temporarily and publicly paused tariffs' on some items for health and public safety reasons, he said. Article content The 70 per cent figure implies that Canada continues to charge tariffs on about $42 billion (US$30.1 billion) of U.S. exports to Canada, excluding automobiles. Article content Champagne's post is pushing back on a May 13 report from Oxford Economics. The note from economists Tony Stillo and Michael Davenport said recent government exemptions to tariffs covered so many categories of products that the result was a 'nearly zero' increase in Canada's tariff rate against the US. Article content More of the same falsehoods. To retaliate against U.S. tariffs, Canada launched largest-ever response — including $60B of tariffs on end-use goods. 70% of those tariffs are still in place. We temporarily and publicly paused tariffs on goods for health & public safety reasons. — François-Philippe Champagne (FPC) 🇨🇦 (@FP_Champagne) May 18, 2025 Article content After the report, opposition politicians accused Prime Minister Mark Carney of not being transparent about his tariff strategy. Carney campaigned in the recent election as the best candidate to handle the trade war, and said numerous times the government's counter-tariffs were designed to 'cause maximum pain' in the U.S. His Liberal Party won the April 28 vote. Article content Article content U.S. President Donald Trump has imposed tariffs against an array of Canadian and Mexican products — including cars and trucks — despite the trade deal that exists between the three countries. Canada responded by first putting 25 per cent counter-tariffs on a list of US-made consumer goods, steel and aluminum, then adding tariffs on US-made vehicles. Article content But on April 15, Champagne announced a series of short-term exemptions. Companies in Canada are allowed to import items used in manufacturing, processing and food and beverage packaging for six months, without paying the tariffs. Items that are needed for public health, health care, public safety, and national security are also exempt during that time. Article content Article content Automakers that manufacture in Canada, such as General Motors Co. and Honda Motor Co., are allowed to bring in some vehicles tariff-free under a process called 'performance-based remission.' The strategy was to give the companies an incentive to keep their Canadian operations despite US tariffs. Article content
Yahoo
15-04-2025
- Business
- Yahoo
Markets, economists see Bank of Canada holding rate despite inflation surprise
Inflation grew less than expected in March, rising 2.3 per cent year over year versus forecasts of 2.7 per cent. But without the decline in gasoline prices, inflation grew 2.5 per cent in March from the same time last year. In February, headline inflation grew 2.6 per cent. Here's what economists think the latest inflation numbers mean for the Bank of Canada and interest rates as policymakers get set to release their latest decision on Wednesday. 'March marked the first month of Canada's counter tariffs on $60 billion of U.S. imported goods, but there were few signs that firms had passed those higher costs onto consumers,' economists Tony Stillo and Michael Davenport at Oxford Economics Ltd. said in a note. They expect inflation to cool again in April to around two per cent year over year on the elimination of the carbon tax and the drop in oil prices. However, they think inflation will flare up again in the second quarter and gain momentum as counter tariffs on $35-billion worth of automobiles made in the United States — implemented on April 9 — work their way into the economy. They are forecasting inflation to grow to nearly three per cent year over year by year-end, driven by the Canada-U.S. trade war. The market briefly boosted bets on a rate cut to about 45 per cent after the release of the data, before sinking back at about 35 per cent. 'However, with rates firmly within neutral territory and plenty of uncertainty about trade and fiscal policy, we still expect the bank to pause as it tries to balance the upside risks to inflation from tariffs against the downside risks to the economy,' Stillo and Davenport said. 'The March inflation data undershot expectations to put a Bank of Canada rate cut this week back in play,' Nick Rees, head of macro research at Monex Europe Holdings Ltd., said in a note. Much of the slowdown could be attributed to a drop in gasoline and transportation costs, which retreated significantly from February. Rees said the same dynamic was recorded in U.S. inflation data released last week. He said a drop in cross-border travel from Canada to the U.S., which hit domestic demand, also contributed to the drop in costs. Policymakers would have held rates at last month's interest rate decision rather than cut by 25 basis points had it not been for Donald Trump's escalating tariff threats against Canada, according to minutes of the Bank of Canada meeting. Rees said the risks appear to have 'faded' somewhat on Trump's mounting reversals, including signals that he is considering the end of 25 per cent tariffs on Canadian-made vehicles. 'That leaves the governing council with a much freer hand to focus on domestic economic conditions and, as such, we suspect that they will take the opportunity to pause,' he said. In a trade war, 'officials have the luxury of not being forced into a decision they may later regret,' Royce Mendes and Tiago Figueiredo at Desjardins Group said in a note, referring to a scenario where the Bank of Canada cuts rates only to have to backtrack as inflation heats up on the fallout from Trump's tariffs. The Bank of Canada has cut interest rates 225 basis points to 2.75 per cent from five per cent in June 2024, the biggest cut by any Group of Seven central bank. 'Given the lags in monetary policy, some of that stimulus is still working its way through the economy,' Mendes and Figueiredo said. Businesses and consumers are also expecting higher inflation, so the Bank of Canada will be wary of doing anything that encourages those expectations, they said. Policymakers were burned by inflation that soared in the aftermath of the pandemic. They think officials will opt to wait and see whether the inflation that an all-out trade war would likely unleash actually materializes. 'We believe the Bank of Canada will opt to hold its policy rate steady at 2.75 per cent,' they said. The Bank of Canada's preferred inflation measures slowed in March after posting above-target monthly increases for the past seven months, Thomas Ryan, North America economist at Capital Economics Ltd., said. Bank of Canada could go either way this week Canadian dollar is on the rise and that might not be a good thing The average three-month annualized rate for CPI-trim and CPI-median slowed to 2.7 per cent from three per cent, 'but at that level, underlying inflation remains too high for the Bank of Canada's comfort,' he said in a note. With inflation concerns easing for the moment and signs that the trade war between Canada and the U.S. could be de-escalating, 'we expect the Bank of Canada to keep interest rates on hold while it waits to assess the impact of retaliatory tariffs.' • Email: gmvsuhanic@ Sign in to access your portfolio
