October 19th’s majority win lead by Justin Trudeau of the Liberal Party will push an overhaul of Canada’s tax system, infrastructure spending, and the economy in general. But what changes can homeowners expect to come from this new government in office and how does this affect real estate?
Sherry Cooper, chief economist for Dominion Lending Centres, said the unexpected majority win will lead to a rebalancing of economic policy in Canada.
While much is yet to be determined, the Liberals have promised to increase government spending for transit, social, and green infrastructure which will lead the country to budget deficits for the next three years.
The majority win takes the pressure off the Bank of Canada in terms of lowering the overnight rate in its announcement expected October 21. In recent years, the Bank of Canada has been doing all the work when it comes to stimulating Canada’s economy. With the Liberal’s promise to increase spending, this should take some pressure off the Bank of Canada to further lower the already low interest rates.
The infrastructure spending plan could also have an impact on mortgage rates if the government issues more bonds to pay for the expenditure. This will lead investors looking elsewhere and mortgage rates to become stable to moderately higher over the next year.
This would then lead to moderate cooling of overheated markets like Vancouver and Toronto while other stable markets are to remain untouched.
It will be interesting to see just exactly how our local Saskatoon real estate market will be affected by the new federal government change, only time will tell.
Saskatoon real estate agent
Century 21 Fusion