![]() We expect the combination of more supply and some softening in demand, due to higher mortgage rates, will cool house prices heading into 2023.Ĭapacity utilization, corporate profits, and investor confidence on the riseįollowing a COVID-19-triggered drop of just over 8% y/y in 2020, public and private investment in Ontario picked up steam in 2021. At the same time, upcoming higher interest rates, as mentioned in the Bank of Canada’s January 26 policy announcement, will soften housing demand later in the year. We project that starts this year will total in a range of 95,000 to 105,000 units and from 80,000 to 90,000 in 2023, compared to 99,000 in 2021. Looking forward, with a record number of dwelling units under construction, the result of a steady increase in housing starts over the past several months, builders in the province are in the process of boosting supply. Average house prices last year climbed by 25.6% y/y, also a record. Following a gain of 8% in unit sales accompanied by a 14.6% rise in average prices in 2020, the combination of record-low interest rates, the above-noted rebound in employment, and a record inflow of permanent migrants drove existing home sales in 2021 up by 18.6% y/y to an unprecedented 270,834 units. Low inventories and evidence of pent-up demand for new vehicles on both sides of the border will boost manufacturing activity in the province as the year progresses.Ī dampening in house prices to be expectedĪlthough COVID-19 lockdowns have temporarily depressed consumer spending, they have not hurt housing demand. Strong demand for motor vehicles on both sides of the borderĪlthough it is still weighed down by the residual impact of COVID-19, lingering supply chain issues and a persisting shortage of computer chips, Ontario’s manufacturing industry has steadily strengthened over the past several months, due in part to an increase in the output of transportation equipment (i.e., motor vehicles). The province’s record-high jobs vacancy rate and the increase in the net employment outlook reported by Manpower Canada, suggest firms will rehire laid-of staff once the COVID-19 restrictions are lifted, as they did in 2021. Over the past 12 months, employment in the province is up by +408,000, just offsetting the -408,600 jobs lost in 2020. The largest jobs gain in the latest month (+19,000) was reported for the construction industry. Then, as now, employment in services took the largest hit, dropping by 139,000 jobs in January of this year, just slightly less than the minus 141,000 figure recorded in 2021. However, a closer look at the data reveals this recent decline is a repeat of what happened when the Delta variant hit the province in April of 2021. The loss of 145,000 jobs in January suggests the onset of the Omicron variant of COVID-19 has stalled the province’s economy. In the wake of this easing, consumer spending, particularly on services, should exhibit a solid recovery that extends well into the second half of the year.Įmployers will start rehiring laid off staff in March or April The precipitous drop in the seven-day rolling average case count of the Omicron COVID-19 variant from a high of 19,347 on January 2, 2022, to its current level (February 6, 2022) of 2,225 has, as it did in 2021, prompted the government to implement a plan to ease lockdown restrictions. The Conference Board’s Index of Consumer Confidence for Ontario has, over the past two months, retreated from 107 to a seven-month low of 100.Įasing of COVID restrictions will soon liberate consumers Business confidence reflected by the Canadian Federation of Independent Business (CFIB)’s Ontario Business Barometer dropped from 68.5 in December to an 18-month low of 56.3 in January. The rapid escalation of the incidence of Omicron has, once again, dampened both consumer and business confidence. Ontario’s response to the rapid onset of the Omicron variant of COVID-19 in late 2021 has been similar to how it reacted to the less transmissible Delta variant that peaked early in the second quarter of 2021. ![]()
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