Canadian Consumer Confidence Level Declines Due To Cooling Real Estate
According to recent telephone pollings, Canadians are losing faith in the housing market and prospects for the economy this month, in the midst of the dilemma of a Toronto mortgage lender.
At the end of the week of May 26, the Bloomberg Nanos Canadian Confidence index dropped to 58.5 as against 59.4 at the end of April, making it the first monthly decrease in four months. Likewise, the number of respondents who were of the opinion that prices of houses would increase, fell from 50.1 percent to 45.5 percent this month.
The belief has declined following refinancing sought by mortgage lender Home Capital Group Inc. after a drop in its deposits, and Moody’s investors service discredited the largest banks in Canada. Also, after Charles Sousa – Ontario’s Finance Minister – enforced a foreign buyer’s tax to suppress speculations, Toronto’s market has started showing signs of cooling.
On Monday, Nanos Research Chairman, Nik Nanos, said in a report that, “Recent declines in consumer confidence scores were most likely driven by a cooling of real estate sentiment after hitting a high in early May.”
Canadians are not only becoming less confident in the housing market, they are also losing faith in the economy. The share of observers, who think the economy will strengthen in the next six months, fell to 19.3 percent from 24.3 percent last month, which makes it the lowest number recorded since November.
Tensions in Trade
On Wednesday, Statistics Canada is expected to give a report on gross domestic product. Economists are predicting a 4.2 percent annual increase in the first quarter growth. The Bank of Canada is, however, expecting growth to moderate, according to what it said last week. More Trade tensions with the U.S. are still to come, after President Trump began a 90-day consultation period before opening talks on the North American Free Trade Agreement.
Ontario, which depended on real estate and factory exports to the United States, also experienced a drop in confidence level, from 63.4 to 60.4 percent this month. Nanos Research asks Canadians’ opinions every week, on job security, personal finances, the outlook of the economy, and the future of real estate prices. The feedbacks form the Bloomberg Nanos Canadians Confidence index.
The most recent edition revealed more excitement in the job market, with the number of people who felt their jobs are secure, up from 48.3 percent a month ago to 49.4 percent. Telephone polling is usually done to get the confidence index, with an average of 1000 respondents in four weeks, which is considered accurate 19 out of 20 times, within 3.1 percentage points.
