Charles St. Arnaud, the chief economist at Alberta Central and a former economist at the Bank of Canada, said in an interview with BNN Bloomberg Monday that over the next few years, there will likely be increased pressure on housing prices. St. Arnaud said mounting pressure will also impact the rental market and stems from weak housing starts coupled with strong immigration.
“That will mean that the average household has to spend more for shelter and that means they need to reduce spending on other parts of the economy…you will see underperformance in consumer spending.” Today, St. Arnaud said Canada’s housing market is experiencing a “tug of war” between two key fundamentals.
“Last year, we saw the impact of higher interest rates, the big decline in affordability that was linked to that and to higher prices,” St. Arnaud said, adding that those constraints are limiting the housing market and restricting demand.