Gluskin Sheff chief economist David Rosenberg made the remarks in the wake of latest data released by the Toronto Real Estate Board, which showed a dramatic 40.4-per-cent year-over-year drop in GTA residential property sales in July. Average selling price last month stood at $746,218, up by 5 per cent year-over-year but nearly 19 per cent below April’s record $920,791.
“We are going through a natural correction in Toronto real estate. I don’t think it’s going to have a deleterious impact on the national economy. I think it’s actually going to be a positive development,” Rosenberg told BNN earlier this week.
“For years the Bank of Canada has been seeking this ‘Holy Grail’ in the Canadian economy away from housing and towards capital investment” he added. “When you really think about it, housing is a consumption good, but it doesn’t really add to the productive capacity of the economy.”
Should this trend continue, Canada can realistically outperform the U.S. economy, the economist said.
“I think the fundamentals in Canada are pretty decent. When I tell people about that they just roll their eyes.” Rosenberg stated. “Everybody seems to think that things are much better in the U.S. – but they are not.”
A major factor that can play into this development is the stark difference between the two nations’ approached towards inbound foreigners.
“[Trump is] cutting back on legal immigration…as soon as Canada is embarking on a very pro-growth immigration policy – and not just aimed at refugees, but high-skilled entrepreneurs,” Rosenberg explained. “And that is going to put a very firm underpinning into not just population inflows but what that means for spending and investment in the economy – especially in the GTA.”
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The recent decline in home sales volume in the Toronto market should be taken as good news for the Canadian economy, as it might be the first indication of a much-needed shift away from leaning solely on the housing segment for economic strength.