June saw a decrease in Canada’s inflation rate to 2.8%, marking its lowest level in over two years. PPS Realty is here to discuss the implications for the Canadian real estate market.
Gasoline prices in Canada dropped by 21% compared to the previous year, according to Statistics Canada. The big drop, along with a 14.7% decrease in telecom services, made our country’s inflation rate the lowest since March 2021.
Despite this downward trend, Canadians are grappling with rising costs in other areas. Food prices are persistently climbing, with a rate increase of over nine percent. This surge has resulted in a total increase of nearly 20% over the past two years. The cost of filling a grocery cart hasn’t escalated this quickly in over 40 years.
Royal Bank of Canada’s economist Claire Fan, however, offers a glimmer of hope. “It’s taking a bit longer for those domestically added pressure to food prices to come down, but they have come down and they will continue to,” she predicts.
However, food isn’t the only factor driving the increase in the cost of living. The efforts by the Bank of Canada to control inflation have led to a significant spike in mortgage interest costs. These costs have seen an increase of over 30% in the past year, significantly influencing the overall inflation rate.
PPS Realty’s owner, Ali Salarian, explains: “As expected the inflation is down to 2.8% now, so we should achieve 2.0% by the end of this year or early 2024 in order for BoC to start to hike the rate in the next meeting, and then gradually reduce it to go back to 2-3% sometimes by 2025-2026.”
Renters are not immune to these shifts. Statistics Canada’s report highlights a 5.8% rise in rent over the past year. This surge positions rent as the second-largest individual contributor to the increased inflation rate, just behind mortgage costs.
One Calgary resident, Stephanie Haynes, shares her experience of a substantial rent hike. “I actually didn’t believe it when I first got it,” she admits, referring to the notice of a more than $400 increase in monthly rent. Rent prices are escalating across the board, leaving many individuals in a tight spot. Consequently, people like Haynes have no choice but to accommodate the increase and adjust their budgets.
The Bank of Canada has increased its benchmark interest rate for the tenth time in just over a year. In the face of such changes, navigating the real estate market may appear challenging. Despite these seemingly challenging circumstances, there’s a silver lining to the situation.
A reduction in inflation rates signifies a healthier economy. A more robust economy presents advantages for everyone involved in the real estate market, from buyers to sellers.
While changes in the inflation rate may bring some temporary uncertainty, they frequently pave the way for fresh opportunities. Significant market changes can lead to unique opportunities. Potential homebuyers and sellers might encounter favourable mortgage rates or find property prices that meet their budgets.
PPS Realty Brokerage has the experience and knowledge to provide sound advice and market insights during these times of change. We are dedicated to helping you decode market trends and make informed decisions to meet your real estate goals.
Navigating the turbulent tides of the real estate market can be challenging, but you don’t have to do it alone. At PPS Realty Brokerage, our team pledges to guide you at every step of your real estate journey. We ensure your path toward homeownership is as smooth and successful as possible. Trust PPS Realty Brokerage to turn the Canadian inflation rate trends into winning strategies for your real estate ventures.
