Real estate markets slowdown essentially negated the gains seen in other vital sectors
Diverging from the markedly strong performance seen during the early part of 2022, Canadian economic growth slowed to 0.3% in April, with RBC Economics registering an advance estimate of a 0.2% decline in May.
This followed an average growth rate of 0.8% over February and March, building on resurgent economic activity in the wake of widespread easing of public health restrictions.
However, real estate markets activity, after having already declined by 1.2% over March and April, is “expected to show more weakness in coming months as home resales continue to retrench following interest rates rises,” RBC said in its latest analysis.
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A major factor influencing this deceleration is the inflation trend, which remains uncomfortably high and at levels that are compelling the Bank of Canada to act more forcefully.
“Markets have priced in almost 75 [basis points] worth of increase in the overnight rate for the bank’s meeting in July. We expect growth to slow more significantly as the year progresses as high inflation and rising borrowing costs bite more into households’ spending power,” RBC said.
