Canadas top central banker says there will be lasting economic damage due to the Covid-19 pandemic with a “prolonged and bumpy” path to recovery.
In his first speech as governor, Tiff Macklem says the central bank expects to see growth in the third quarter of this year as people are called back to work and households resume some of their normal activities as restrictions ease.
But he warns that Canadians shouldn’t expect the short and sharp economic bounce-back expected over the coming months to last.
The combination of uneven reopenings across provinces and industries, the unknown course of consumer confidence, and unemployment rates will “likely inflict some lasting damage to demand and supply,” Macklem says in a speech Monday.
He said ongoing physical distancing rules may mean workplaces can’t be as productive as they once were, adding that many services will remain difficult to deliver.
Not everybody’s job will come back.
The good news: Mortgage rates have never been lower.
The less good news for some:
“The new rules to qualify for mortgage insurance from Canada Mortgage and Housing Corp. (CMHC) are expected to cut the maximum purchase price for borrowers of insured mortgages by up to 12 per cent, more than offsetting the drop in mortgage rates for those who can’t come up with a 20-per-cent down payment.”
They expect a 25% drop in some regions:
Canada’s national housing agency says the number of new homes being built and sold will remain below the levels they were at before COVID-19 until 2022 at least, and prices won’t get back to where they were for another two years either.
In a special report, the Canada Mortgage and Housing Corporation said Wednesday that the COVID-19 pandemic will lead to a “historic recession in 2020,” which will lead to “significant falls in indicators of the housing market.”
Just like the flu, but more so!
IMF chief says pandemic will unleash the worst recession since the Great Depression.
Even Canadian real estate markets are showing signs of a downturn.
Are you keeping your social distances out at all those open houses?
Southseacompany shared this link to a list of global cities with the most overvalued real estate:
Swiss bank UBS’s Global Real Estate Bubble Index 2019 found a significant overvaluation in half of the 24 housing markets analysed by the research. The bubble risk appears greatest in seven global cities, with Munich the most vulnerable, followed by Toronto, Hong Kong, Amsterdam, Frankfurt, Vancouver and Paris. Major imbalances are also found in locations such as London, San Francisco, Tokyo and Stockholm, while valuations are considered stretched in Los Angeles, Sydney and Geneva.
Read the full article here.