Today, the Bank of Canada lowered its target for the overnight rate to 3.75%, with the Bank Rate set at 4% and the deposit rate at 3.75%. The Bank continues its balance sheet normalization efforts.

Globally, the economy is projected to grow at a steady 3% over the next two years. Growth in the U.S. is anticipated to be stronger than previously expected, while China’s outlook remains cautious. The euro area’s growth has been sluggish but is expected to improve modestly next year. Inflation in advanced economies has decreased recently, aligning with central bank targets. Since July, global financial conditions have eased, partly due to expectations of lower policy interest rates. Additionally, global oil prices are roughly $10 lower than projected in the July Monetary Policy Report (MPR).

In Canada, economic growth was around 2% in the first half of the year, with an anticipated 1.75% growth in the second half. While overall consumption has grown, it has decreased on a per-person basis. Exports have seen a boost from the opening of the Trans Mountain Expansion pipeline. The labor market remains subdued, with the unemployment rate at 6.5% as of September. Population growth continues to expand the labor force, but hiring has been moderate, impacting young people and newcomers the most. Wage growth remains high compared to productivity growth, indicating excess supply in the economy.

Looking ahead, GDP growth is expected to strengthen gradually as lower interest rates support economic activity. A modest increase in consumer spending per capita, along with slower population growth, is expected to drive this recovery. Residential investment is projected to rise, fueled by strong housing demand, while business investment should pick up as overall demand grows. Exports are likely to stay robust, supported by strong U.S. demand.

The Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026. As the economy gains momentum, the excess supply will gradually be absorbed.

Consumer Price Index (CPI) inflation has dropped notably from 2.7% in June to 1.6% in September. While inflation in shelter costs remains high, it has begun to ease. Excess supply in the broader economy has lowered the prices of many goods and services, and the recent drop in global oil prices has driven down gasoline costs. These factors have collectively brought inflation down. The Bank’s core inflation measures are now below 2.5%. With inflation pressures no longer widespread, expectations from businesses and consumers have largely stabilized.

The Bank anticipates that inflation will hover around its target range throughout the forecast period. The upward pressure from shelter and services costs is expected to diminish, while downward pressures should ease as the economy absorbs the current excess supply.

With inflation nearing the 2% target, the Governing Council has decided to reduce the policy rate by 50 basis points to bolster economic growth and maintain inflation around the mid-point of the 1% to 3% target range. If the economy aligns with the Bank's forecast, additional rate cuts are anticipated. However, the timing and pace of any future reductions will depend on economic data and its implications for inflation. Decisions will be made on a meeting-by-meeting basis. The Bank remains dedicated to maintaining price stability for Canadians, keeping inflation close to the 2% target.

Source: bankofcanada.ca

In September 2024, 1,047 homes were sold through the MLS® System of the Ottawa Real Estate Board (OREB), marking an 11.4% increase compared to September 2023. However, sales were 17.4% below the five-year average and 15.4% lower than the 10-year average for September.

Year-to-date, a total of 10,485 homes have been sold in 2024, reflecting a 6.4% rise from the same period in 2023.

"As the housing market adjusts, Ottawa’s fall outlook remains strong,” says OREB President Curtis Fillier. "Sales are picking up, and prices are steady. Both buyers and sellers are reevaluating their strategies amid expectations of further interest rate cuts, extended amortizations, and higher price caps for insured mortgages.”

Fillier adds, “While recent policy changes will boost demand, Ottawa’s market faces ongoing supply challenges. We’re not building enough homes, particularly the ‘missing middle’ type.” The Canada Mortgage and Housing Corporation (CMHC) recently reported that Ottawa's population-adjusted construction rate is at its lowest in nearly a decade. A City of Ottawa progress report shows the city has met only 22% of its annual housing target by the end of August.

By the Numbers – Prices:

• The MLS® Home Price Index (HPI), which offers a more accurate picture of price trends than averages, shows the overall benchmark price for all homes was $642,800 in September 2024, a slight 0.2% increase from September 2023.

• The benchmark price for single-family homes was $729,000, up 0.5% year-over-year.

• Townhouses/row units had a benchmark price of $500,000, down 1.7% from the previous year.

• Apartments saw a benchmark price of $414,200, a 1.3% decrease from September 2023.

• The average price of homes sold in September 2024 was $685,551, up 1.4% from a year ago. The year-to-date average price was $679,082, a 0.9% increase from 2023.

• The total value of home sales in September reached $717.7 million, a 12.9% jump from September 2023.

OREB notes that while average sale prices can reveal long-term trends, they shouldn’t be viewed as a measure of individual property value changes, as prices vary across different neighbourhoods.

By the Numbers – Inventory & New Listings:

• There were 2,343 new residential listings in September 2024, up 3.9% from the previous year, and 4.7% above the five-year average and 11.6% higher than the 10-year average.

• Active residential listings rose 16.9% to 3,529 units by the end of September 2024. This was 43.3% above the five-year average and 4.6% above the 10-year average.

• Months of inventory stood at 3.4 in September 2024, slightly up from 3.2 in September 2023. This measure represents how long it would take to sell all current listings at the current rate of sales.

source: OREB