Economic conditions will continue to improve over the course of 2021, albeit with a temporary blip downwards for GDP and employment growth in the first quarter as we work our way through the remainder of the necessary public health measures, including lockdowns and stay-at-home orders.
In the second half of 2021, once vaccine uptake is more widespread and case counts recede, expect the sectors most impacted by COVID-19, including hospitality and entertainment related sectors, to improve.
Very low borrowing costs will be sustained throughout 2021 to support continued economic recovery. Because of this, negotiated mortgage rates will remain low throughout the year as well. It is possible that mediumand longer-term fixed rates could start edging upward later in 2021 as recovery takes hold and underlying Government of Canada bond yields trend upwards anticipating rate hikes from the Bank of Canada in 2022 and beyond.
Looking longer term, immigration and net growth in non-permanent residents will trend to record levels once the pandemic has subsided with global uptake of the various vaccines. The GTA will continue to be the single-greatest metropolitan beneficiary of immigration into Canada, as the substantial federal government immigration targets take effect.
Population growth will be especially important for the condominium market.
Newcomers looking to purchase their first home or rent a condominium apartment from an investor, will see both condo ownership demand and rental demand pick up substantially, thereby helping to absorb any excess inventory of units available for sale.
The key challenge to the housing market over the next year and beyond will be a familiar one: lack of supply. Policymakers at all levels of government have acknowledged the need for a greater supply of housing and a greater diversity of housing types.
TRREB looks forward to continuing their work with policymakers to find solutions to bring more housing online
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