{"id":454839,"date":"2025-09-27T07:48:12","date_gmt":"2025-09-27T07:48:12","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/454839\/"},"modified":"2025-09-27T07:48:12","modified_gmt":"2025-09-27T07:48:12","slug":"interest-rate-cut-offers-hope-to-canadas-sluggish-housing-market-housing","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/454839\/","title":{"rendered":"Interest rate cut offers hope to Canada\u2019s sluggish housing market | Housing"},"content":{"rendered":"

Vancouver, Canada \u2013<\/strong>\u00a0After a major slowdown in Canada\u2019s high-priced housing market, real estate sales in the country appear to be gradually inching up again.<\/p>\n

That is cause for optimism across the country\u2019s sector \u2014 hopes buoyed even more after the central bank dropped its key interest rate to its lowest in three years.<\/p>\n

Recommended Stories list of 4 itemsend of list<\/p>\n

The Bank of Canada\u2019s 0.25 percent rate cut on September 17 \u2014 mirroring its US counterpart<\/a>\u2019s move the same day \u2014 has experts hopeful it might help lift home sales and prices, which had left thousands of properties sitting unsold.<\/p>\n

Mortgage broker Mary Sialtsis, in Toronto, where sales have been slowest, said she saw homes taking longer to sell this year, as many of her clients held off buying amid economic anxieties.<\/p>\n

\u201cIt\u2019s a little bit slower right now than it has been in the past\u201d, she told Al Jazeera before the rate announcement. \u201cDuring the pandemic, prices really spiked \u2014 there was almost like a buying frenzy.<\/p>\n

\u201cThings have tempered quite a bit since then.\u201d<\/p>\n

Many would-be homebuyers had been reluctant to invest amid United States President Donald Trump\u2019s chaotic imposition of tariffs on Canadian imports, she said.<\/p>\n

As a result, many sellers were pressured to settle for less.<\/p>\n

\u201cThere\u2019s just been, I think, a general hesitancy,\u201d Sialtsis said.<\/p>\n

But last month, national home sales rose just more than 1 percent, according to the Canadian Real Estate Association (CREA), the fifth consecutive month of small increases, as average house prices climbed nearly 2 percent from last year.<\/p>\n

Real estate is one of Canada\u2019s most lucrative sectors. It makes up nearly 400 billion Canadian dollars (US$287bn) of the country\u2019s gross domestic product, representing 13 percent of Canada\u2019s economy.<\/p>\n

\u2018Rates should have come down a lot faster\u2019<\/p>\n

Last week, the Bank of Canada reduced its federally set key interest rate to 2.5 percent, down by a quarter-point.<\/p>\n

The central bank\u2019s governor, Tiff Macklem, told reporters the Crown corporation\u2019s council had a \u201cclear consensus\u201d that dropping the rate would \u201chelp the economy adjust while maintaining well-controlled inflation\u201d.<\/p>\n

\u201cObviously, tariffs are weakening the Canadian economy\u201d, he said at a news conference after the rate cut. \u201cWe are proceeding carefully \u2026 We don\u2019t want Canadians to have to worry about big increases in the cost of living.\u201d<\/p>\n

Despite what the bank described in a statement as \u201ca lot of job losses\u201d and a weakening economy, increased housing activity was among the few \u201csigns of resilience\u201d.<\/p>\n

The central bank\u2019s key interest rate influences private banks\u2019 own lending rates, including mortgages. Lower rates mean more people can afford to take out house loans \u2014 and also many mortgage-holders can get some relief on their costs.<\/p>\n

The bank\u2019s rate started climbing in early 2022, skyrocketing from just 0.25 percent in early 2022 up to 5 percent the next year, its highest since 2001.<\/p>\n

\"Canada<\/a>Real estate is one of Canada\u2019s most lucrative sectors [David P Ball\/Al Jazeera]<\/p>\n

According to Sialtsis, keeping the rate high so long \u201ccaused some people to pull back\u201d.<\/p>\n

She said some of her would-be clients did not buy houses, despite it having become a buyers\u2019 market. They were \u201cholding off because of the uncertainty due to the trade tariffs and the potential impact\u201d.<\/p>\n

But since April last year, the nationally set interest rate has been gradually declining as the country battled post-pandemic inflation, which drove up the cost of living for Canadians.<\/p>\n

Shaun Cathcart, senior economist with CREA, said the historically high interest rates kept the market \u201cmostly asleep\u201d for three years.<\/p>\n

\u201cWe thought that 2025 was going to be a rebound year,\u201d he said. \u201cAnd then, of course, what happened was this total tariff chaos just completely derailed that.<\/p>\n

\u201cPeople just pulled right back and said, \u2018We\u2019re not going to make any big decisions like this, I don\u2019t know if I\u2019m going to have a job.\u2019\u201d<\/p>\n

But recent improved house sales, he said, suggest the initial \u201cdread\u201d from the trade war may have \u201csort of calmed down\u201d.<\/p>\n

And he believes there\u2019s a good chance \u201cthat trend could accelerate this fall.\u201d<\/p>\n

For University of British Columbia economics professor Andrey Pavlov, holding the rates high as long as the central bank did \u201cwas a mistake\u201d.<\/p>\n

\u201cInterest rates should have come down a lot faster and a lot further than they did,\u201d he told Al Jazeera prior to the latest rate cut.<\/p>\n

\u201cIncome per capita has been flat or declining in Canada for the past two years \u2014 allowing that to happen [was] a policy mistake.\u201d<\/p>\n

Pavlov said he would like to see more \u201csubstantial\u201d reductions in the central bank\u2019s rates to get the housing market moving again.<\/p>\n

\u201cIt\u2019s a very early trend of recovery\u201d, he said. \u201cHigh interest rates obviously present a major headwind to real estate.<\/p>\n

\u201cSome substantial interest rate cuts will then establish the trend of normal recovery and going back to a normal or seller\u2019s market.\u201d<\/p>\n

Ottawa launches new housing agency<\/p>\n

Before the rate cut, the country\u2019s minister of housing and infrastructure, Gregor Robertson, acknowledged slower-than-expected real estate sales, but added some regions fared better than others.<\/p>\n

For instance, Canada\u2019s most populated metropolis, the Greater Toronto Area, actually saw its house sales drop last month.<\/p>\n

\u201cGenerally, the market is challenged by the US tariffs and the threats we face across the global economy with wars and uncertainties\u201d, Robertson told Al Jazeera.<\/p>\n

\u201cHousing and infrastructure are right at the core of Canada\u2019s economy \u2026 It\u2019s critical that we leverage that overall investment and create more jobs \u2014 create more homes.\u201d<\/p>\n

On September 15, Ottawa unveiled Build Canada Homes, a new agency with a 13 billion Canadian dollars (US$9.3bn) mission to ramp up construction of up to 50,000 \u201cfactory-made\u201d housing units on federally owned land.<\/p>\n

In a statement, Prime Minister Mark Carney said the new agency will \u201cpartner with private market developers to build affordable homes\u201d for middle-class Canadians.<\/p>\n

Ottawa\u2019s plan would see the private sector offer \u201cconstruction capacity, innovation, supply chains, and financing\u201d \u2014 with the government bringing to the table \u201cfederal lands, faster approvals, and strong incentives\u201d.<\/p>\n

And in a nod to industries worst-hit by US tariffs, Carney said the initiative will follow a \u201cbuy Canadian\u201d policy, to \u201cchannel demand through Canadian industries\u201d such as lumber, aluminium and steel.<\/p>\n

\"Canada<\/a>Private developers can be \u2018very speculative\u2019, experts warn [David P Ball\/Al Jazeera]<\/p>\n

Economist Jim Stanford, with the Centre for Future Work, said federal promises to expand the housing supply were \u201cambitious\u201d.<\/p>\n

\u201cA big expansion of housing activity would help Canada weather the Trump tariffs,\u201d he said.<\/p>\n

But he cautioned against relying too much on private developers, which he described as \u201cvery speculative and very financialised\u201d.<\/p>\n

\u201cIf it\u2019s just left to the private housing industry \u2026 we could see one of the ramifications of a Trump recession would be a further decline in housing prices,\u201d he warned, \u201cand a decline in housing construction.\u201d<\/p>\n

Although falling home prices can stimulate demand and construction, the Canada Mortgage and Housing Corporation notes that in some cases \u201cfalling prices and tighter credit\u201d can create \u201crisks for buyers,\u201d and too many unsold homes on the market can lead to projects being delayed or cancelled.<\/p>\n

\u2018Strength of the real estate market\u2019<\/p>\n

The housing minister said the affordability crisis has created urgency around building more homes for middle-income earners, as well as non-market homes for lower-income and homeless people.<\/p>\n

\u201cWe need to really scale up the number of homes being built below market,\u201d Robertson said, \u201cand make it more affordable for Canadians.\u201d<\/p>\n

According to mortgage broker Sialtsis, many Canadians \u2014 including renters and first-time homeowners \u2014 have been deeply challenged by a lack of affordable housing.<\/p>\n

While close to two-thirds of Canadians own their primary home, affordability remains a major barrier, she noted.<\/p>\n

But despite the housing sector\u2019s slow recovery this year, Sialtsis remains a \u201cfirm believer in the strength\u201d of Canada\u2019s real estate market overall.<\/p>\n

\u201cPersonally, I have seen significant improvement in my business activity over the last couple of weeks,\u201d she told Al Jazeera after the interest rate cut, \u201cand expect that this announcement will continue to strengthen it.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Vancouver, Canada \u2013\u00a0After a major slowdown in Canada\u2019s high-priced housing market, real estate sales in the country appear…\n","protected":false},"author":2,"featured_media":454840,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,12633,943,1700,126,3663,6333,285,16,15,286],"class_list":{"0":"post-454839","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-business-and-economy","10":"tag-canada","11":"tag-economy","12":"tag-features","13":"tag-financial-markets","14":"tag-housing","15":"tag-politics","16":"tag-uk","17":"tag-united-kingdom","18":"tag-us-canada"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115275164411186235","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/454839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=454839"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/454839\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/454840"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=454839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=454839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=454839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}