Residential Market Commentary - Uneventful budget but unemployment improves

Last week’s federal budget generated plenty of headlines, mostly based around bloating deficits and federal job cuts, but there was almost nothing new for the housing and mortgage sectors.  Virtually all the government’s housing plans were laid out during the election campaign and many are already being implemented. 

For example, the budget did formalize a GST exemption for a narrow band of homebuyers.  First-time buyers purchasing a newly built home priced at less than $1 million will not have to pay GST.  There will also be a GST reduction for first-timers buying a new build priced between $1 million and $1.5 million.  Both of those measures are in a bill that is already making its way through Parliament. 

The government’s highly touted Build Canada Homes initiative received its formal launch in the budget.  The new agency, which is already being put in place, will focus on increasing the stock of rental and social housing in an effort to address the need for shelter rather than satisfying the desire for ownership. 

With the flurry of activity and analysis surrounding the federal budget winding down, market watchers are turning their attention back to interest rates. 

The latest data to draw their scrutiny are the October employment numbers.  Statistics Canada reports the economy generated 67,000 new jobs, dropping the unemployment rate to 6.9%. 

The Bank of Canada has shifted its focus away from inflation and onto job growth, so most analysts expect the Bank will hold rates steady at its December meeting, as the labour market shows signs of resilience.