In a June 17 report by CBC News
, TD’s latest quarterly economic forecast predicted more moderate resales and price growth due to weaker demand brought about by worsening affordability and rising borrowing costs.
“However, barring significant new government regulatory measures to curb housing market speculation later this year, more concrete signs of a housing market slowdown are unlikely to be seen until 2017,” the Bank reported.
“Even then, there tends to be a lag before weaker resale demand translates into a moderation in building activity,” it stated.
The prevailing malaise in the national economy—which encountered another setback just last month as the energy sector weakened further due to the Fort McMurray blaze—would make Canada’s central bank not keen on an interest rate hike in the near future.
“We believe the Bank of Canada will likely want to keep its foot on the accelerator for as long as possible, and is not likely to begin raising its policy interest rate until 2018,” TD said in its report.
The Alberta wildfire dented TD’s projections of national economic growth from 1.9 per cent to 1.3 per cent by the end of 2016. The province is expected to benefit from a strong resurgence by the second half of the year, however.
“While it's hardly consolation for the destruction suffered, the rebuilding efforts will provide a boost to growth in the province over the latter half of 2016 and into 2017,” TD said.
“This development, along with a nascent recovery in its underlying economy, will help to catapult Alberta to the upper end of the provincial leaderboard next year.”
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While knowing exactly when the long-feared correction in Canada’s red-hot housing markets would occur remains difficult due to various unpredictable factors, signs that “the party will come to an end” are not likely to be visible until next year, according to TD Bank.