INTEREST RATES
Q2 was defined by the Bank of Canada’s fourth rate announcement on June 5th when it finally carried out the first rate cut in over four long years, citing steadily declining inflation and slackening GDP as the drivers of its decision.
INFLATION
Canada’s annual inflation rate edged up to 2.9 per cent in May — an increase from 2.7 per cent in April — mostly due to higher prices for services, Statistics Canada said on Tuesday.
GDP
The Canadian economy bounced back in April, up 0.3% month-on-month. This landed in line with Statistics Canada’s advanced guidance and market expectations. The flash estimate for May points to a slight advance of 0.1% m/m being driven by gains in the manufacturing, real estate and finance sectors, with retail and wholesale trade acting as a headwind.
THE REAL ESTATE MARKET
Metro Vancouver home sales registered on the MLS® remained below seasonal and historical averages in June. There were 5,723 detached, attached and apartment properties newly listed for sale on the MLS® in Metro Vancouver in June 2024. This represents a 7 per cent increase compared to the 5,347 properties listed in June 2023.
So far in 2024, total home registrations are down 1.4% from 2023. Registrations for multi-unit homes decreased 0.5%, while registrations for single detached homes decreased 6.2%. In May, 2,620 new homes were registered in B.C., a 44.6% decrease compared with May 2023.
CAPITAL GAINS INCLUSION RATE
The 2024 Federal Budget announced an increase to the capital gains inclusion rate for capital gains realized on and after June 25, 2024, from 50% to 66.67% for corporations and trusts and from 50% to 66.67% on the portion of capital gains realized in the year that exceed $250,000 for individuals.
Source: Scotia Wealth Management
HOME FLIPPING TAX
The BC home flipping tax applies to the income you earn from selling a property in British Columbia (including presale contracts) if you owned the property for less than 730 days. The intention is to discourage short-term holding of property for profit as part of the Homes for People Plan (see below). The tax is imposed under the Residential Property (Short-Term Holding) Profit Tax Act, and will take effect starting January 1, 2025.
Property purchased before the tax’s effective date may be subject to the tax if sold on or after January 1, 2025 and owned for less than 730 days, unless an exemption applies.
Source: Province of British Columbia
HOME FOR PEOPLES PLAN
Through the legislative changes of Bill 44 and 47 announced in the Fall of 2023, new pro-active planning tools are being launched for local governments to secure affordable housing and community amenities. New guidelines from the province will be published Fall 2024.
Here is what to look for: Reduced timelines, inclusionary zoning, density bonus, transportation demand management, and tenant protection bylaws.
