-- Canada's market for new homes remains under pressure, highlighted by prices extending a year-long streak below year-ago levels in March, said Bank of Montreal (BMO) after Wednesday's New Housing Price Index (NHPI) data.
A glut of inventory is butting up against soft demand conditions, especially in the investor space, as rents continue to fall, noted the bank.
Governments are coming to the rescue with a few recent measures, stated BMO. A couple -- including an expanded HST tax break for all buyers, and not just first-timers, and lower development charges -- are targeted at Ontario, home to some of the softest markets in the country.
The bank pointed out it welcomes efforts to cut costs and expects them to eventually support market activity. Still, both measures are temporary and designed to address the current backlog of unsold inventory and unfinished projects.
Over the longer term, fundamentals like demographics and availability of materials and labor will continue to drive the market, it added.
The silver lining of the current softness is that it keeps downward pressure on shelter costs in the consumer price index, offsetting some of the upside risks stemming from the Iran war, according to BMO.