We forecast a modest start to housing market recovery in 2023: Senior economist
Consumer confidence rose to the highest level since the end of September as more Canadians see real estate values rebounding after the central bank conditionally halted its interest-rate hikes.
The Bloomberg Nanos Canadian Confidence Index, a measure of sentiment based on weekly polling, jumped by the most since the end of November. The index climbed to 47 on Friday, up from 45.7 a week earlier and 45.3 on Jan. 20, shortly before the Bank of Canada said it would stop to assess the impact of rate increases and hold its benchmark overnight rate steady at 4.5 per cent.
Improvements in sentiment point to expectations of an imminent recovery Canada’s housing market, which saw benchmark real estate prices plunge 15 per cent from last year’s peak as higher rates squeezed buyers. More than a quarter of respondents now expect prices to rise in the next six months, the highest proportion since September — though still below historical averages.
“Views on real estate have consistently been a foundational element in consumer confidence,” said Nik Nanos, chief data scientist of Nanos Research. “Although not returning to the exuberant levels from a year ago when the housing market was red hot, the weekly tracking is seeing the beginnings of a potential positive trajectory.”
The jump is more evidence of a sustained rebound for Canadian consumers at the start of 2023. Sentiment is still recovering from late last year, when the index recorded some of the most pessimistic readings since the depths of the COVID-19 pandemic because of uncertainty about the economic outlook, inflation and interest rates.
Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security, the economy and real-estate prices. Bloomberg publishes four-week rolling averages of the 1,000 telephone responses.
Recession fears are also abating. About 48 per cent of respondents now expect the economy to be weaker in six months time, down from nearly 64 per cent in November.
Statistics Canada reports fourth-quarter gross domestic product data on Tuesday, with economists in a Bloomberg survey expecting an annualized growth rate of 1.6 per cent.