Canada’s millennials may have another reason to dislike Donald Trump: he could make affording a home on this side of the border even more difficult.
A Trump administration in the U.S. could send Canadian house prices even higher — perversely because the Republican would make the U.S. economy worse, a conference on Canada’s economic future heard Wednesday.
“A Trump victory will boost the Canadian housing market,” Linda Nazareth, a senior fellow at the Macdonald-Laurier Institute, said at The Economist’s Canada Summit in Toronto.
The panel was discussing “what ifs” for Canada’s economy, and the possibility of a Trump presidency was the first hypothetical situation brought up.
Nazareth said Trump’s “risky economic policies” — such as opposition to free trade deals — would hurt the U.S. economy, forcing the country’s interest rates to stay low for longer.
And since U.S. interest rates affect Canadian interest rates, that would mean lower interest rates — and lower mortgage payments — in Canada.
Americans moving to Canada?
Nazareth isn’t the only one arguing that The Donald could boost house prices north of the border. Real estate agency Royal LePage earlier this year speculated that a Trump victory could push some Americans to move north, putting further pressure on house prices here.
“The economic miracle that is contemporary Canada is driven in significant measure by our success at attracting quality immigrants to our land,” Royal LePage CEO Phil Soper said, as quoted in the National Post.
“While this is not new news, the possibility of a Donald Trump presidency has put renewed global focus on the often stark differences in opportunity and attitude that exist on either side of our huge border.”
Panelists at Wednesday’s summit were asked repeatedly if they believed Canada is in the midst of a housing bubble — and no one would respond.
That was true of Finance Minister Bill Morneau, who didn’t answer the question directly but conceded that it’s a “huge issue” for Canadians, and a “complicated” one as well.
“We are looking very carefully” at developments in the housing market, Morneau said, noting his government already took steps to cool the market with a recent tightening of mortgage rules.
Relentless price growth
Canada’s hottest housing markets need little help from Trump’s policies or anything else.
House prices in Toronto were up 15.7 per cent in May, compared to a year earlier, while in Vancouver they are up 29.7 per cent.
Home sales volumes in both of the country’s hottest housing markets are up by double digits from a year ago, but appear to have stabilized in recent months. Total sales have stayed largely the same month after month in both cities this spring, despite soaring prices.