Political & economic forecast National issues
will see a slowdown in growth. The made-inCanada policy changes to cool the housing markets also seem to be overshooting their mark a little, which will be a drag on consumer consumption.
More than they often realize, rental housing providers are affected by steps taken by the federal government. One example is the stress test for new homebuyers. Another is the newly expanded Rental Construction Financing Arguably the biggest policy move was Initiative, which will impact rental development. the stress test for qualifying for mortgage financing. That impacted would-be first time Given the low rate of unemployment, coupled home buyers more than move-up buyers. with a low rate of inflation, one would expect Ironically, the government has now introduced the incumbent federal government to cruise the First-Time Home Buyer Incentive to assist to re-election in October. However, the recent the very people who were and are most SNC/Lavalin scandal has put the election result negatively affected by the stress test. into more doubt. With a minority government of either the Liberals or the Conservatives, relatively few policy changes are likely to be made. In some ways that is a good thing, since the rental industry can be a target. However, in other ways, a policy freeze would be unhelpful. The interests of tenants in the private rental market and of private rental housing providers would be better served by a change of course on the National Housing Strategy to put more funding into the Canada Housing Benefit, as well as the Rental Construction Financing Initiative, so the Canada Housing Benefit can help more renters in the private market. That is less likely to happen under a minority government, whichever major party forms that government. The world economies, and Canada’s weak business investment, suggest that Canada
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Despite the new First-Time Home Buyer Incentive, rental demand is likely to stay strong. As unemployment rises somewhat, young adults are likely to stay in their parents’ homes longer, or to share with others, thus cutting back on that portion of demand.
Quebec The Quebec government of Premier Legault is seen as business friendly, which should slightly mitigate the economic factors, both external and internal. According to CIBC Economics’ most recent data, Quebec’s real GDP grew 2.8 per cent in 2017 and close to 2.5 per cent in 2018, slightly besting Canada’s rate for 2018. For 2019, CIBC forecasts 1.9 per cent real growth in Quebec, a little higher than the forecast of 1.8 per cent for Canada as a whole.
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