Renewed Housing Optimism Boosts Canadian Consumer Confidenceby
Share of optimists on real estate prices now double pessimists
Benchmark confidence index has biggest increase since October
Canadian household confidence rose, boosted by improving sentiment about the national housing market, weekly telephone polling shows.
The Bloomberg Nanos Canadian Confidence Index climbed to 56.2 in the week ended Dec. 9 from 55.6, for the biggest gain since October. The indicator reached a 2016 high of 59.9 in August, but had been falling steadily since.
Some 37.4 percent of those surveyed expected higher local real estate prices over the next six months, up from 35.9 percent the prior week. That’s more than double the 17.3 percent of people who predict lower prices.
The share of respondents who see the economy improving in the next six months also rose last week to 22.7 percent, the highest since September. Those who see it weakening however accounted for 29.8 percent of respondents, the highest share since April.
Such polarized views of progress mesh with Stephen Poloz’s assessment. The Bank of Canada Governor said last week uncertainty about global business spending “remains undiminished” following U.S. elections. While Prime Minister Justin Trudeau’s family tax benefits have boosted consumer finances, investment and exports remain muted after a crash in oil prices.
This week may give Canadians pause to reconsider where house prices are headed. The latest quarterly report on the record-high ratio of consumer debt to disposable income is due on Wednesday. Poloz holds a press conference on Thursday to discuss his semi-annual review of financial market risks, and he has put Vancouver and Toronto housing markets at the top of his list.
Here are some other findings from the latest polling:
- Even with Trudeau’s tax cuts people remain pessimistic about their personal finances. The share of people saying their situation has improved over the last 12 months jumped by 1 percentage point to 17.2 percent, still lagging the 23.7 percent who reported a deterioration.
- Views of job security moderated last week. The share of people calling their position “secure” fell to 45.7 percent from 46.1 percent, and “not at all secure” fell to 6.9 percent from 7.2 percent.
- Confidence remains a regional story in a country where Alberta oil workers are losing jobs, while service companies in British Columbia and central Canada are growing. Confidence was lowest in the Prairie region at 48.7, while in Quebec it was tops at 59.1. Ontario, Canada’s most-populous province, had a confidence reading of 58.
The Bloomberg Nanos Canadian Confidence Index is based on a rolling four-week average of telephone polling with 1,000 respondents. It’s considered accurate within 3.1 percentage points, 19 times out of 20.