Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada Makes A Huge GDP Revision, BoC Made Supersized Rate Cut On Bad Data
Canada’s economy is doing much better than previously believed, and that’s a problem. Statistics Canada made astronomical revisions to real GDP, adding the equivalent of an extra year of output over the 3 years of revisions. The shift means the economy is functioning much closer to its maximum capacity, indicating much more inflation is in the pipeline. That’s going to be a big problem for the Bank of Canada, who just made a double rate cut based on a growing output gap that isn’t an issue.
Bank of Canada Warns Policymakers Against Tinkering With Mortgages
Canada’s number two banker warned policymakers they were playing with fire when it comes to mortgages. Bank of Canada Deputy Governor Carolyn Rogers warned that “tinkering” with mortgage regulations for short-term affordability improvements often costs borrowers more. In the medium and long-term, the tinkering will erode affordability further and produce more liabilities for the economy.
Canadian Real Estate Prices Make Another Sharp Drop Despite Rising Sales
Canadian real estate sales picked up but prices continued to go lower last month. CREA data shows the price of a benchmark (typical) home fell 0.8% to $707,700 in September. That brings the cost 2.7% lower than last year, and 16.9% below the all-time high hit in March 2022. Annual growth of sales (+30%) is helping to brew some enthusiasm, but a recent immigration policy shift may dampen that in the coming months.
Canadian Consumer Insolvencies Continue Climbing Towards New Highs
Canadian consumer insolvencies are climbing. Annual growth came in at 8.8% to 11,452 insolvency filings in September. It was the third-biggest September on record, which covers more than 40 years of data. This has been a general trend over the past year, which is a bit of an issue considering this is recession-like performance when the narrative is that things are fine.
Canadian Building Intentions Improve, But Inflation Killed Real Growth
Canadian building intentions appear to have improved but that may not be the case. Building permit values rose 11.5% (+$1.3 billion) to $13 billion in September, a record high in nominal values. However, when adjusted for inflation permit values have been on a steady downturn since the Spring. A lot more money for a lot less building—something we’re all getting used to these days.
Canada Abruptly Cancels Fast-Track Student Visas Used By 4 In 5 Indian Applicants
Canada suddenly ended two popular programs to expedite student visas for certain countries. The Student Direct Stream (SDS) and Nigeria Student Express (NSE) programs expedited student visas for those countries, and tend to have a higher approval rate. It was used by a whopping 80% of students from India, Canada’s largest source of international students. It didn’t make much news, but the odd part is the abruptness of the cancellation, announced just a few hours before shutting down.
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