As Canada’s housing market has shown signs of softening, so too is consumer confidence, BNN Bloomberg is reporting.
A poll conducted by Bloomberg Nanos Canada Confidence Index, which measures sentiment on a weekly basis, confirmed the worsening outlook with a decline to 54.3 last week — the lowest it has been since December 2020. Declining by 1.8 points is also the biggest single-week decrease since April 2020, just after the pandemic began.
Consumer confidence has taken a serious hit because the rising prices of housing and goods, higher interest rates and the war in Ukraine are beginning to make consumers weary.
According to BNN’s analysis, 55% of Canadians anticipate continued downward pressure on housing prices, although that is down from 59% last week and 64% a month ago. However, considering that housing prices remain well above historical averages, there’s less reason to worry that the survey data might indicate.
The Canadian Real Estate Association (CREA), which just released its market analysis for April, noted that conditions in Canada’s housing market are moving into balanced territory, which spells good news for swaths of Canadians across the country who have been priced out of their local markets. As borrowing costs continue rising and purchasing power diminishes, prices should continue falling, although it remains to be seen by how much.
CREA’s statistics showed that home sales declined by 25.7% last month from a record-breaking April 2021, but the number of transactions also dropped by a significant 12.6% from March, which CREA noted is the slowest month since the first few months of the pandemic during the summer of 2020. Moreover, as CREA noted, housing markets are still above historical averages, as April 2022 was the third busiest on record.
Average home prices decreased by 6.2% month over month in April to $746,000, although they rose by 7.4% year over year. The MLS Home Price Index dropped on a monthly basis for the first time in 2022, falling by 0.6% from March. Annual growth, however, rose by 23.8%, although that’s noticeably softer than the 29.2% increase in February.