The outbreak of corona virus in the world has resulted to a shrunk of the economy. It has placed unprecedented measures on income, employment, migration and oil prices declining, affecting Canada. But with the ease of restrictions, and the slow recovery of the growth of economy, it is expected that by 2021, economy will change with housing prices and rate of the Bank of Canada increasing.
1.Recovery of Canada housing markets
The economic uncertainty brought as a result of corona virus has affected the housing sector negatively resulting to a fall of prices in that sector. Even before the outbreak of this disease, Canada has been in recession. The prices have been falling because housing is not included in the economic fundamentals of the country. Insights from the Canadian housing sector show that house price might fall terribly towards the end of the year. Although following the measures put to curb the virus and control it from spreading further, it is forecasted that by 2021 the housing markets might recover and do better than its dismal past performance. The recovery of the sales and prices will be largely contributed by the slow growth of economy; trajectory of the financial markets, inclusion of the Canadian housing markets in the economic fundamentals, employment around the oil areas rising and steady movement of people into the country.
- The rate of the Bank of Canada to increase?
In early 2020, the Bank of Canada pushed rapidly their target overnight rate to 0.25%. The rate was based on the disruption of the economy impacted by the outbreak of corona virus, consumer price index as well as announcements of Bank of Canada. With the second wave infection underway, lock downs, curfews, the Bank of Canada is reluctant of increasing the rate to protect the economy. Loose of monetary policy and quantitative easing sees consumer price index remain low, nearly zero, below the Bank of Canada. And as a result, the target will remain 0.25% with the economy experiencing a recession. Reports released show that the total monetary value produced of all finished goods and services, gross domestic product, surpassed the low of the previous month by dropping rapidly. With the ease of restriction imposed to curb the virus and slow recovery of economy, it is estimated that it may take one to two years for gross domestic product to recover fully for the rate to rise.
In conclusion, with the anticipation that vaccine will be available by mid next year 2021, it is expected that the economy will rise and things get back to normal. The forecast of unemployment rate to decrease seems lively. High employment will have a significant effect on the trajectory of housing prices due to high demand of houses in the oil dependent areas Sparo Mortgages.