B.C. mining booms into a new ‘super cycle’

Nelson Bennett
Western Investor

The $660 million invested in 2021 was close to 2012’s record amount and $12.6 billion in production hit an all-time high for the province

Early development on the Blackwater Gold Mine.: said to be the largest Cariboo mine project proposed in the last decade. | Prince George Citizen

The $660 million invested in 2021 was close to 2012’s record amount and $12.6 billion in production hit an all-time high for the province

Last year, exploration spending in B.C. hit $660 million – just $20 million shy of the record $680 million spent in 2012. And according to Bruce Ralston, minister of Energy, Mines and Low Carbon Innovation, total production from B.C. mines in 2021 is forecast to be $12.6 billion, which would be an all-time high.

“It looks like 2022 is going to be an equally strong year,” Ralston said last week during the Association of Mineral Exploration (AME) annual Roundup conference at the Vancouver Convention Centre, which had 3,000 registered attendees, about 2,400 of whom were attending in person.

The Horgan government has been more supportive of mining than the NDP of the 1990s were. Horgan’s ministers acknowledge the role mining is playing in the energy transition needed to address climate change. That transition, which will require a massive amount of copper, nickel, lithium and rare earths, may be behind what one commodities analyst predicts is a new super cycle for certain metals.

“I do expect a super cycle for copper,” Patricia Mohr, former Scotiabank commodities analyst, said at a session on financial and commodities markets.

A global economy recovering from a pandemic-induced recession is driving demand for all commodities, and the energy transition is expected to amplify demand for metals that are critical to things like electric car batteries and renewable energy: copper, nickel, lithium, cobalt and rare earths. There are currently exploration projects in B.C. that are focused on nickel and rare earths.

Last year, copper hit record prices of US$4.88 per pound. Last week, Scotiabank Economics predicted that copper prices will average US$4.25 per pound for the next two or three years and hit US$5 per pound by 2025.

B.C. is Canada’s largest copper producer.

“It’s been a very impressive year,” Gordon Clarke, director of the mineral development office of the BC Geological Survey. “Mining and exploration programs … reached new heights in 2021.”

In 2019, lower copper prices led Imperial Metals to shut down its Mount Polley copper mine. Now, thanks to copper’s surge, the company plans to restart the mine this spring.

Several advanced stage projects, mine restarts and expansion projects were approved in 2021, including:

•December 2021: Ascot Resources Ltd. received a mining permit to restart the Premier Gold underground mine near Stewart, B.C., in the Golden Triangle.

•October 2021: Osisko Development Corp. received approval for the expansion of the Bonanza Ledge underground mine, which was previously part of the Barkerville Gold project.

•July 2021:  the Blackwater project, owned by Artemis Gold Inc.– and said to be the largest mine project proposed for the Cariboo in the last decade – got the green light for an early works permit.

As for promising exploration and development projects in the works, Ralston pointed to the Tudor Gold Treaty Creek project in northwest B.C.’s Golden Triangle.

“It may be one of the largest gold discoveries found in quite some time,” Ralston said.

He also pointed to the Lawyers gold-silver project north of Smithers and the Shovelnose gold project south of Merritt as potentially promising finds.

“Those are new, emerging projects that are still in the exploration side of the ledger, but we’re pretty optimistic about what’s going forward on these projects and many others,” Ralston said.

Mining accounts for B.C.’s second most valuable export, with metallurgical coal and copper being the most valuable. Mineral exploration is important, not only because of the money spent in B.C., but because it is critical to developing new mines and extending the life of existing mines.

More than half of the $660 million spent in 2021 on exploration was advanced exploration by mining companies with existing mines, and more than half of the exploration spending was for gold (54 per cent ), followed by base metals (29 per cent) and coal (11 per cent).

In B.C., 21 per cent of mineral exploration spending went to Indigenous-affiliated vendors, according to an AME economic analysis released last week, and 17 per cent of drilling companies are First Nation owned or affiliated. The Tahltan First Nation, for example, is a partner in Tahltech Drilling Services.

The average expenditure on a single mineral exploration project is $1.2 million.

“And over a five-year period, with a multi-area based permit, that number goes up to $11 million,” said AME president Kendra Johnston. “That’s the value of one individual project over five years.” •

 

© 2022 Western Investor

Massive increases in rent and housing prices put pressure on Port Coquitlam to build more homes

Diane Strandberg
Western Investor

City council to review a housing study that looks at adding 5,550 units over the next 10 years — more than a third of them rental units.

Housing costs are rising in Port Coquitlam. | File photo

City council to review a housing study that looks at adding 5,550 units over the next 10 years — more than a third of them rental units.

Investor alert, cash cow,… think those are overblown terms for houses in East Vancouver or Kitsilano?

Think again.

Those terms are in common use for single family homes being marketed in Port Coquitlam to investors as buying a home in the city is increasingly challenging for anybody without a huge nest egg or plans to invest.

Meanwhile, renters, many of whom are in older homes slated for redevelopment, are paying increasingly steeper rents and could risk losing their units when developers sell.

Port Coquitlam has focused on housing affordability in recent years, with three major rental projects in the works, encouraging infill by allowing small lot developments, taking action on predatory renovictions, establishing a transit oriented neighbourhood, and encouraging low-rise condominium development in its downtown core, among other things.

But despite these efforts, a new housing study compiled by Urban Matters, to be reviewed by council Tuesday (Feb. 8), recounts the struggle many are facing to rent, buy or stay in the city.

The study, funded by a $50,000 grant, fulfills a provincial request of municipalities to provide more housing data.

Port Moody carried out a similar housing report in September, which found the city’s housing situation to be “grim.”

PRICED OUT OF THE CITY?

In Port Coquitlam, housing affordability is becoming a huge concern.

The following quote, an excerpt from the report, shows a typical story:

“We love Port Coquitlam. We were very fortunate to find our current residence before rental costs got ridiculous. We now can’t move because we would be doubling our rent. We just have to hope our landlord doesn’t sell.”

According to the report:

• Port Coquitlam has one of the highest home ownership rates in Metro Vancouver, but the number of people who own is declining from 80 to 77 per cent (2016 figures the latest available)
• More people are renting…
• • Renter households are growing faster than owner households with a growth rate of 32 per cent between 2006 and 2016
  • The number of renter households increased by 1,215 — nearly three times the 12 per cent growth rate of owner households 
• Rents have increased…
• • Median rents were relatively stable from 2011 to 2015, before starting to rise in 2016
  • Between 2011 and 2020, the overall median rent for purpose built rental units in Port Coquitlam increased by 70 per cent — from $825 to $1,400 
• More renters are living in what’s called the secondary market, secondary suites or apartment units owned by others
• • “As of 2016, only 11 per cent of renter households were served by purpose-built rental, meaning most renters in Port Coquitlam are in the secondary market, including rented houses, rented condominiums, or secondary suites.”

“While the secondary market is an extremely important source of housing, it is often less secure over the long-term than purpose-built rental,” the report notes. 

Meanwhile, a couple with children with a median income of $149,496 would have to pay $4,492 a month for a purchased home, roughly 23 per cent more than they can afford. 

As well, many on lower incomes — who pay more than 30 per cent of their income on housing — are falling through the cracks.

This includes seniors on fixed incomes, whose numbers are growing, lone parent families, and newcomers, the report states.

There are an estimated 300 people at risk of homelessness in the Tri-Cities, in addition to 86 who were counted as homeless in 2020, and 292 individuals and families are waiting for subsidized housing, an 87 per cent increase since 2013.

WHERE DOES THE PROBLEM START?

You don’t have to go far to see how the housing market is changing in Port Coquitlam.

A local website of homes for sale shows how the once stable home-market is transitioning.

Of 31 single-family homes listed for sale this week on the online real estate website REW, none were under $1.1 million and many were for investment properties while others being sold had multiple units that were rented out.

Here’s what the report states:

Between 2010 and 2020, average home sale prices in PoCo grew by 60 per cent for a single family dwelling, by 71 per cent for row houses and townhouses, and by 68 per cent for apartments/condominiums. 

Meanwhile, the number of affordable homes for those earning a median income dropped to 18 per cent from 46 per cent between 2013 and 2018, underscoring the affordability problem for those dreaming to own a home in Port Coquitlam.

WHAT ARE THE SOLUTIONS?

The housing study concluded that, to meet the needs of PoCo’s population, an additional 5,500 dwellings (or 550 a year) are needed over the next 10 years. 

Of those:

• 1,790 new dwellings will be needed for renters
• 3,740 for owners

The current pace of development in PoCo, according to the report, is approximately 300 dwelling units per year — substantially below the projected need.

But there are challenges, because while a land capacity analysis found these additional units can be accommodated under existing OCP designations at full build out, there are many constraints, including homeowner desire to develop or redevelop, financial feasibility of a project, and contextual factors, such as land assembly.

Port Coquitlam council is expected to review the housing study on Tuesday and staff are expect to follow up with recommendations.

You can click here to watch the 2 p.m. regular public meeting virtually.

Among the report’s suggestions for the city are the following:

• Adopting a strata conversion policy, a rental replacement policy and/or residential rental tenure zoning
• Incentives for development of new rental buildings including expedited processing times and reductions in parking requirements near major transit areas 
• Review and update the density bonus and inclusionary zoning policies
• Expand opportunities for row house development and small lots
• Consider pre-zoning parcels for higher density in strategic locations
• Consider opportunities to allow additional forms of housing such as lock-off suites in townhouses, secondary suites in duplexes, triplexes, and fourplexes
• Identify areas to intensify with diverse and varied housing development, such as a those with aging housing stock
• Create partnerships with other levels of government to develop lands for supportive and affordable housing

 

© 2022 Western Investor

Realtor and lawyer found mostly liable for failure to advise client of foreign buyer’s tax

Keith Fraser
The Vancouver Sun

 The B.C. Supreme Court in Vancouver. Photo by NICK PROCAYLO /PNG

A realtor and a lawyer in Kelowna have been found mostly responsible for failing to advise a couple from Britain that they would need to pay B.C.’s foreign buyer’s tax upon the purchase of a home in Kelowna.

 

Robert Edward Shave and Kelly Jane Ashford immigrated to Canada in January 2018, settled in the Okanagan community and hired a real estate agent and later a lawyer to purchase the new home.

Before February 2018, the 20 per cent foreign buyer’s tax only applied to homes purchased in Metro Vancouver. Afterward, purchases in other regional districts, including the Central Okanagan, were subject to the tax.

On Feb. 15, 2018, the pair met with Dean Desrosiers, a realtor with Century 21, and hired him to help them buy a new home.

At the time Desrosiers was aware that the couple had recently arrived in Canada and did not advise them about the existence or applicability of the tax, according to a B.C. Supreme Court ruling on the case.

 

In May 2018, the couple completed a contract of purchase and sale for a residential property in Kelowna which had them declaring that they were not Canadian citizens nor permanent residents.

They also retained Roy Sommerey, a lawyer with Doak Shirreff Lawyers, to assist them with the purchase of the home and told him that they were new to Canada. Sommerey responded with an email saying, ‘Welcome to Canada!”

The purchase didn’t go through, however, and the pair continued their search for a new home.

On June 27, 2018 they purchased a residential property in Kelowna for $862,000.

For the new sales contract sent to them, Desrosiers had indicated they should initial a clause to indicate they were citizens or permanent residents of Canada. He had misunderstood a statement made earlier by the two buyers.

 

The pair signed the contract and then hired Sommerey to help them finalize the purchase.

In his ruling in the case, Justice Alan Ross noted that Sommerey conceded that at the time he was first retained, he was aware the plaintiffs were new immigrants and that added taxes were applicable to non-resident Canadians.

Sommerey also conceded that he didn’t notice when he reviewed the contract for the first home that the plaintiffs had indicated they were non-residents. The sale on the second home completed on July 25, 2018.

The judge noted that neither Shave, who had secured a teaching job at the University of British Columbia, Okanagan, nor his wife had closely read any of the documents that Sommerey presented them to sign, including the property purchase tax form on which they indicated they were permanent residents.

 

In January 2020, the couple received a notice of assessment issued by the provincial government in the amount of $172,400 for the unpaid foreign buyer’s tax on the purchase of their new home.

They hired a lawyer and tried to have the assessment set aside but were unsuccessful after which they decided to file a lawsuit against the defendants.

The judge concluded that the realtor had a “clear and obvious” duty to advise the plaintiffs of the tax.

“Having determined that a duty existed, it is clear that, by failing to advise the plaintiffs, Mr. Desrosiers’ conduct fell below the standard expected of reasonably competent realtors.”

Any reasonable realtor would understand that the risk of paying an added 20 per cent tax for a family home would be an extremely important piece of information for prospective buyers, he said.

Regarding Sommerey, the judge concluded that his conduct did not meet the standard of care of a reasonably competent solicitor.

The judge found the realtor and the real estate agency 75 per cent liable, the lawyer and his law firm 20 per cent liable. The couple were five per cent liable for contributory negligence. The defendants will be responsible to pay their proportionate share of the $172,400 plus interest.

 

© 2022 Vancouver Sun

A new hallmark of luxury living – Landmark on Robson

Michelle Hopkins
REW

 In the heart of Vancouver, on Robson Street and within easy walking distance of world-class theatres, art galleries, museums, luxury boutiques and gourmet restaurants, the city’s newest landmark is taking shape.

On the site of the former Empire Landmark hotel, multiple award-winning Asia Standard Americas’ Landmark on Robson will be home to two elegant, luminous twin towers, mosaics of glass and concrete, that’s redefining luxury in Vancouver’s downtown core and promising to become iconic urban buildings  

 

As Robson Street’s newest signature luxury address, Landmark on Robson offers a sophisticated collection of 236 magnificent condominium residences, where each moment is filled with a higher degree of comfort. Conceived by award-winning Vancouver-based MCM Architects, high craftsmanship and a passion for perfection define the living spaces. The goal is to take the experience of being in a classic European-inspired home and offer it to buyers in an understated yet elegant design. 

The interiors are conceived by an internationally acclaimed Japanese interior designer, Koichiro Ikebuchi, who brings an uncommon degree of elegance to every home with engineered hardwood flooring, Zen-inspired ensuites and bespoke Minotti Cucine kitchens and closets that will dazzle – The attention to detail is nothing short of magnificent.

 

“My inspiration comes from the stones, the woods in nature, of course, their texture and colours, however, I also obtain inspiration from people’s behaviours, gestures and habits,” says Ikebuchi. 

Your floor-to-ceiling windows will boast unparalleled views of English Bay, Coal Harbour to Stanley Park and the North Shore Mountains, while generous-sized cantilevered balconies are designed to further open up to those jaw-dropping vistas while providing shade and shelter. 

 

 

“We are bringing a new standard of opulence to Vancouver,” says Henry Mok, Vice President, Asia Standard Americas. “We have projects in China, Hong Kong and this is the first time we are bringing our expertise in ultra-luxury towers to the city.” 

The towers flagship will surely be the Six Stars Club Robson, an exclusive private residents club featuring 18,000-square-feet of urban amenities, including a state-of-the-art fitness centre with a yoga studio, ozone lap pool, social lounges, a fully equipped business centre, music and tutor rooms. It doesn’t stop there; there will be a couture salon, multimedia room with billiards, a lounge and a wet bar. If you are hosting a soiree, you need only place a call to the 24/7 concierge  to book the refined private dining room’s catering kitchen.

 

As one of the world’s premier developers of international upscale residences, Asia Standard Americas is renowned for exceptional vision, design excellence, attention to detail and unmatched amenities. 

Landmark on Robson will truly stand as an unparalleled new development in one of Canada’s most vibrant cities. The presentation centre is open by appointment just down the street from the site at 1400 Robson. For more information, visit landmarkonrobson.com or call 604.566.2288 to book a private viewing. Completion is set for Fall 2023.

 

© 2022 REW.

Toronto’s home prices are now more expensive than Vancouver’s: report

Laura Hanrahan
other

Toronto home prices have been skyrocketing over the past year, but as astronomically high as they got, they were no match for Vancouver’s ultra-expensive prices. Until now, that is.

A new report from RBC found that Toronto’s composite MLS HPI benchmark price reached $1.260 million in January, finally edging out Vancouver’s $1.255 million and making it the most expensive market in Canada for the first time in decades.

“It’s a stunning development though not entirely surprising considering how hot the Toronto-area market has become, especially since the fall. Toronto’s benchmark price soared over the past five months, including a mind-blowing 4.3% monthly increase—or nearly $52,000—in January alone,” the report reads. “Vancouver prices have accelerated as well, just not to the same extent.”

Despite pandemic restrictions and a major snow storm, Toronto’s real estate market remained strong in January as limited inventory continued to bolster fierce competition. Active listings were at near-historical lows at the end of the month, the report says, down 44% year-over-year.

Single-family homes have seen some of the biggest gains in the market, with prices up 36% year-over-year. Condos aren’t too far behind with a 26% annual increase in prices.

“We see little that will materially alter these trends in the near term though expect that higher interest rates will gradually cool things down later this year,” the report says.

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The same low inventory levels have also plagued Vancouver’s market with active listings barely increasing from a decades-low last month.

“Successful bidders had to be more aggressive on offered prices,” the report says. “This drove up the area’s composite MLS HPI benchmark 18.5% y/y to a new high of $1.255 million.”

Single-family homes are up 22.7% annually and condos are up 14% year-over-year. These tight demand-supply conditions are expected to continue putting pressure on housing prices in the near term.

 

Copyright Ⓒ 2022 Buzz Connected Media Inc.

RBC reveals Canada’s most expensive housing market right now

Ephraim Vecina
other

The market has seen the sustained influence of outsized demand and scarcity

While Vancouver stood as the priciest market in Canada for decades, the pendulum shifted to Toronto as of last month, according to a new analysis by RBC Economics.

Preliminary data from local real estate boards indicated that Toronto’s composite benchmark price ($1.26 million) has pulled ahead of Vancouver’s ($1.255 million) in January – a change that RBC described as “a stunning development, though not entirely surprising.”

The surge was impelled by a five-month streak of increases in Toronto’s benchmark price, including a 4.3% monthly increase in January alone. The current trend is showing no signs of abating, RBC said.

“It’ll take more than a spike of COVID-19 cases and a major snowstorm to meaningfully slow down the market,” RBC said. “Active listings ended the month still near historical lows (down 44% y/y). Competition between buyers is as fierce as ever.”

Read more: Canada house prices – what will be the pace of growth this year?

Intensified bidding wars made a major contribution to the 33.3% annual increase in Toronto’s benchmark home price, RBC said.

“Buyers are especially fond of single-family homes (prices are up an astounding 36% y/y, with gains exceeding 40% in Durham and Peel regions) but also increasingly interested in condos (prices up 26% y/y),” RBC said. “We see little that will materially alter these trends in the near term though expect that higher interest rates will gradually cool things down later this year.”

 

 

Copyright © 1996-2022 Key Media, Inc.

The CMHC wants its market share back, but some observers wonder if the timing is right

Stephanie Hughes
The Vancouver Sun

Agency has set target of 40 to 50 per cent of mortgage insurance market, CEO told Parliamentary committee

The Canada Mortgage and Housing Corporation has already acknowledged it needs to claw back business it ceded in the mortgage insurance market. Now, it’s getting more specific about its targets.

Once the dominant player in the country, the CMHC’s share of new mortgage insurance originations fell to 26 per cent in the third quarter of 2021, down from 49 per cent in the second quarter of 2020. It’s a major comedown that has eroded the Crown Corporation’s influence, leaving it in third place behind private players Sagen and Canada Guaranty.

In late January, however, CEO Romy Bowers went before the standing committee on finance to discuss inflation in the Canadian economy, where she was asked about market share by Adam Chambers, the Conservative MP representing Simcoe North.

“Since the last financial crisis, we have been deliberately decreasing our market share, because we feel it’s good to have competition from our private sector competitors in the mortgage insurance space,” Bowers said. “Having said that, we’re very aware of the importance that mortgage insurance plays in financial stability. We have a target that’s approved by our board to strive for about 40 per cent to 50 per cent of the market.”

The CMHC, she said, will work hard to compete with private sector players to reach that target, which would require at least a fifty per cent increase to current levels. Some market watchers, though, wonder if the agency is picking the right time to onboard risk that is ultimately backstopped by taxpayers.

“I think it’s reasonable a question to ask: Is now the time that CMHC needs to be gaining market share?” Chambers told the Financial Post in an interview. “Are we growing this balance sheet at the wrong time?”

Is now the time that CMHC needs to be gaining market share?

Adam Chambers

Chambers argued that as Canada ranks among the world’s frothiest real estate markets (standing behind only New Zealand, according to Bloomberg Economics), it makes little sense for the government housing agency to take on more risk. That Canadians went on a mortgage binge during the pandemic, tacking on $193 billion in mortgage debt only raises the stakes.

Former CMHC chair Bob Kelly echoed the concern in an interview, noting that there had been deliberate cuts to the market share in recent years — until now.

“I just don’t see why it’s necessary, particularly at this point in the cycle and particularly for first-time borrowers, which tends to be the majority of the customers of CMHC,” Kelly said. “Private markets tend to be more efficient and better at sorting risks.”

The CMHC’s course correction is the latest twist for an agency founded in 1946 to provide housing for returning war veterans, and a significant reversal from the vision of late Finance Minister Jim Flaherty, who regretted the size and scale the CMHC had taken on over the years, particularly in the wake of the 2008 financial crisis.

In the years leading up to the crisis, a handful of experts watched the build-up in mortgage risk south of the border with concern. Former Bank of Canada governor David Dodge was among them, and he criticized the CMHC in 2006 for introducing new products, such as interest-only loans and 35-year amortizations on mortgages, arguing they would add inflationary pressures.

It was not until the financial crisis was well underway that the housing agency moved to tighten underwriting rules with a slew of new measures, such as imposing down payment minimums and shortening maximum amortization periods.

After seeing the U.S. housing market inflated by government-backed mortgage loan companies like Freddie Mac before the market collapsed, financial stability became a part of Evan Siddall’s mission in 2013 when he was appointed as the organization’s CEO.

In the summer of 2020, as the pandemic raged on, Siddall tightened underwriting practices to reduce risk exposure.

“There is no doubt that we have willingly chosen to forgo some profitable business that our competitors would find appealing,” he wrote.

There is no doubt that we have willingly chosen to forgo some profitable business that our competitors would find appealing

Evan Siddall

At the time Siddall cautioned other mortgage lenders and banks about high-risk lending, noting that there was a “dark economic underbelly to this business that I want to expose.”

But the CMHC’s competitors swooped in anyway.

The precipitous decline in market share that has also led to a waning influence on the broader mortgage insurance market, and that’s one of the reasons that Benjamin Tal, CIBC’s deputy chief economist, believes that the CMHC needs to bulk back up.

“I think that you need to be at least as large as the private (companies), not smaller than them,” Tal told the Financial Post. “And I think that we needed all sorts of policy vehicles, though the effectiveness of policy on the insured market is diminishing because the insured market is shrinking target. You need the policy, this agency should be tough enough to impact the market…. We need to really achieve this balance in which you can make a difference.”

Getting back to market share balance will be no easy feat as clients who have turned to the private players may have a newfound loyalty to them.

“I think that clearly we have a data deficit when it comes to the (housing market) and the CMHC is extremely well-equipped to close this gap,” Tal said. “So, I think that in order to establish their brand, they have to invest more in marketing. But then also market research and data as a data provider to the market to increase the reliance of the market on them. They are well-equipped to do so more than any other player in this space.”

But the hurdles along the way make Tal skeptical that the CMHC will be able to get back to its 50 per cent levels.

The agency itself told the Financial Post it was still in the “early stages of developing its refreshed commercial strategy”.

“We will engage with our industry partners as this work continues to progress,” it said in a statement to the post.

Chambers, who had been a senior advisor to Flaherty, told the Financial Post the “mission creep” of the pre-crisis era needed to be avoided.

“As a taxpayer-backed insurance company, whose risks ultimately lie with the taxpayer…. transparency is very important,” he said. “The taxpayers are effectively on the hook.”

• Email: [email protected] | Twitter: StephHughes95

 

© 2022 Vancouver Sun

Canadians deepening their faith in red-hot housing market even as rate hikes loom

Erik Hertzberg
The Vancouver Sun

Optimism about the nation’s housing market rose to near record levels last week, poll finds

Some 64 per cent of Canadians expect the value of real estate in their neighbourhoods to increase over the next six months. Photo by Gavin Young/Postmedia

Real-estate-addicted Canadians aren’t being scared off by the threat of higher interest rates, polling suggests.

Optimism about the nation’s housing market rose to near record levels last week, despite warnings from central bank and regulatory officials that borrowing costs are poised to increase and could hit the real estate market.

Some 64 per cent of Canadians expect the value of real estate in their neighbourhoods to increase over the next six months, according to the latest weekly survey by Nanos Research Group for Bloomberg News. That’s up from 60 per cent last week, making it one of the fastest 7-day increases in confidence on record.

It’s a surprising result, coming a week after the Bank of Canada warned it plans to start raising lending rates as early as next month. It also suggests the central bank and other officials have a long way to go to quell speculative expectations in the nation’s housing market, which has seen prices surge more than 40 per cent since the start of the pandemic.

Canada is behind only New Zealand in Bloomberg’s global measure of frothy housing markets.

Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security and their outlook for both the economy and real estate prices. The results are compiled from a rolling four-week average of about 1,000 responses.

The question on housing prices has moved above 64 per cent only once, when it hit multiple weekly records in April last year. The historical average is about 40 per cent. Only 5.6 per cent of respondents said they expect prices to fall, also one of the lowest on record.

At its last policy decision on Jan. 26, the Bank of Canada held interest rates steady but said it would be raising borrowing costs soon to cool inflation — prompting the nation’s bank regulator to warn that some markets could face a correction.

Peter Routledge, the head of the Office of the Superintendent of Financial Institutions, said on the Herle Burly podcast last week that some regions could see home-price declines of up to 20 per cent.

Still, the central bank’s decision to wait until at least March to start its hiking cycle may actually be fuelling the housing market, economists say.

“There’s a chance that the decision to wait five weeks to start pushing policy rates higher could provide further fuel to the already raging inferno that is Canadian housing,” Benjamin Reitzes, rates and macro strategist with Bank of Montreal, said via email. “There’s little doubt that based on housing alone, rates need to be higher.”

bloomberg.com

 

© 2022 Vancouver Sun

Housing market in a ‘speculative fever,’ Canadian regulator says

Natalie Obiko Pearson
The Vancouver Sun

Higher rates are set to dampen that fever and lead to a slowdown in prices.

Property prices in Canada are set to fall as rising interest rates bring an end to a “speculative fever” in the housing market, the country’s banking regulator said on a podcast.

An extended run-up in home prices, readily available mortgages, and a propensity among Canadians to buy and flip homes have all fueled the buying frenzy, Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said on The Herle Burly podcast this week.

Higher rates are set to dampen that fever and lead to a slowdown in prices, he said.

“In some markets, where you had really rapid increases in prices, you could see a fall of 10 per cent, 20 per cent,” Routledge said.

Canada has emerged as one of the world’s frothiest property markets — for 12 consecutive years, the housing market has soared to record heights. As fears of a housing bubble have grown, Ottawa has imposed an added layer of protection in the form of a stress test, ensuring new borrowers have enough income to handle higher interest payments.

In Toronto, Canada’s largest city, home prices jumped 18 per cent last year — taking the average price to nearly C$1.1 million — as buyers competed for a dwindling number of available properties.

Routledge indicated, however, that sharp declines in certain housing markets are unlikely to pose a broader threat to the country’s financial system, pointing to the way in which Vancouver and Toronto — the country’s two most expensive markets — have weathered similar declines in recent years.

“You’re talking peak-to-trough declines of 20 per cent,” in those cities between 2015 and 2017, he said. “So we can absorb that volatility.”

Bloomberg.com

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© 2022 Vancouver Sun

B.C. providing $71.3 million for new tourism projects

Glen Korstrom
Western Investor

Latest round of ‘recovery’ cheques worth more than $21 million now being sent to 50 groups

A skier enjoys a day at Hudson Bay Mountain Resort, where new funding will help build a winter events centre | submitted

Latest round of ‘recovery’ cheques worth more than $21 million now being sent to 50 groups

The B.C. government is sending out cheques for a combined total of $21.3 million, to help fund 50 new tourism projects.

The money is part of its previously announced Community Economic Recovery Infrastructure Program, which doled out $20 million for 54 projects last year. 

Victoria plans to spend an additional $30 million in the next two years to help fund more tourism projects, bringing the program’s total investment to $71.3 million.

B.C. had previously said that it would spend up to $90 million on the program. 

Examples of approved projects include an Indigenous campground development, trail upgrades to accommodate adapted mountain bikes and wheelchairs, arts and culture event space, and beautification and signage projects.

Projects were approved based on what the government deemed to be demonstrated tourism benefits to communities and residents, and the money will help employers pay workers.

One of the grants, for example, is going to the Smithers Ski and Snowboard Club.

That club’s president, Cormac Hikisch, said the money will help “establish a winter sports events centre at Hudson Bay Mountain Resort for alpine ski and snowboard competitions.”

Over at the Red Mountain Racers Society, president Jane Paterson said funding from the program will help it “construct a new race office and timing facility, International Ski Federation-level T-bar lighting and the expansion of snowmaking to our ski cross course.”

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