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Canadian Housing Rebound Improves Consumer Confidence

Canadian Housing Rebound Improves Consumer Confidence
3 min. read
Canadian Housing Rebound Improves Consumer Confidence

Image: Mikhail Sedov / Shutterstock.com

Canada’s rebounding housing market has helped boost consumer optimism, according to the recently released Bloomberg Nanos Canadian Confidence Index.

The index rose from 58.3 at the end of June to 58.6 at the beginning of August. The report explains:

 “A score of 50 on the diffusion index indicates that positive and negative views are a wash, while scores above or below 50 suggest net positive or net negative views in terms of the economic mood of Canadians.”

The increasingly positive outlook is most likely due to a combination of reduced borrowing costs, improving economic growth, and lessening concern about any potential large corrections in the housing market.

Those who said they believed local real estate prices would increase in the next six months made up 43.2% of survey respondents at the end of July. That was the highest month-end percentage since December 2017 – just before the new, tighter restrictions for mortgage qualification went into effect. Those who see real estate prices declining were up from 13.7% in June to 15.2% in July – but, that is still below the average of 16.4% for the year.

Uptick in Home Sales

Despite the previous decline in Canadian home sales, the market is now showing signs of revival, thanks to decreasing borrowing costs and stronger economic growth.

For example, sales of Toronto homes and Vancouver properties each jumped 24% last month – showing that even the priciest markets have started to rebound. Additionally, housing starts also saw a boost in June, especially among multi-family buildings, like condos and row houses.

This is an interesting turn for consumer confidence in the country, considering that – until May – the index had plateaued for more than a year.

Help from a Strong Labour Market

Job security is also closely tied to the increase in home sales and rebounding consumer confidence; survey respondents noted their highest level of job security since April.

The job security index, which was at 66.67% a month ago, has since climbed to 68.98%. The majority of respondents (69%) said they felt secure or somewhat secure at their job. Only 10% felt at least somewhat insecure. The difference between the two groups is the widest it has been since April.

Views on the Economy

Regarding the Canadian economy in general, the gap between pessimists and optimists has also improved; it decreased slightly from 7% in the previous month to 6.2% in July. This also suggests an increase in consumer confidence overall.

However, not all provinces responded in the same way. Ontario and British Columbia were strong drivers of the increase in the consumer confidence index, while declines were seen in Quebec and the prairie provinces.

Data Collection

Each week, 250 Canadian adults are surveyed about their views on: the outlook of the economy; their personal finances; real estate prices in their area; and job security. The surveys are administered via telephone interviews conducted by Nanos Research. Each month, Bloomberg publishes four-week rolling averages of the 1,000 completed telephone interviews. Monthly data goes back as far as 2008.

Interviewers ask participants questions such as:

  • “In the next six months, do you believe that the value of real estate in your neighbourhood will increase, stay the same or decrease?”
  • “In the next six months, do you think the Canadian economy will become stronger, weaker or that will there be no change?”
  • “Would you describe your job at this time as secure, somewhat secure, somewhat insecure or not at all secure?”

Data collected throughout the survey period helps establish the general mood of Canadians’ financial health and economic expectations. This information provides valuable insight into consumer confidence across the nation and how it fluctuates based on various personal and external factors.

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