Record low stocks should continue to propel strong growth in house prices in Canada in the first half of the year, but economists at Capital Economics expect house price inflation to slow thereafter, as bond yields and mortgage rates begin to rise.
“Although prices are set to rise strongly in the first half of 2021, the market will soon have to grapple with higher interest rates. We still think the Bank of Canada will maintain its policy rate at 0.25% until 2023, but we have changed our estimate inflation limits as the global vaccination process continues and governments, at least in North America, are still considering further stimulus.We now expect Canada’s 10-year bond yield to rise to 1.5% this year and 1.75 % in 2022 from the current 1.1%. “
“We expect house price inflation to slow from an average of 10% in the first quarter to 5% by the end of the year and to just over 2% by the end of 2022.”
Information and analytical department of TeleTrade
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