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At Brookfield RPS we are committed to thought leadership. We have assembled a great collection of interesting and thought provoking articles, reports, surveys, industry information and more. We hope you enjoy and check back regularly.

Reuters Analyst Poll: House Prices Not Coming Down Yet

A poll of analysts by Reuters said that although Ontario’s measures will cool activity in Toronto and its surrounding areas, the effect will be modest and temporary. Overall, economists do not expect Canadian house prices to come down yet thanks to low interest rates, a weak Canadian dollar and strong demand.

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We’re Not Alone

House prices in Australia have been growing at a consistent and quick pace, much like in Canada. The response by the Australian government? It is addressing this growth by making “housing affordability” a feature of its budget and boosting supply.

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The Ontario Budget: Housing-Related Highlights

The Ontario government’s first balanced budget in a decade was published yesterday. Although the budget is lean on further housing announcements (especially given that Ontario Finance Minister Charles Sousa just announced his 16-point Ontario Fair Housing Plan last week), there are a few good insights that can be gained from it.

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The Neural Lace

It’s actually not that long ago that computers migrated to our pockets and then our wrists. If you continue that progression logically, it does follow that computers will one day enter and/ or pull information straight from our brains. I recognize this sounds very ‘sci fi’, but the march towards this is already in play. Here’s more on what Facebook, Elon Musk and others are doing in this field.

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Flooding Hits the Montreal-Ottawa and Hamilton Areas

Flooding has hit many parts of the country this week. In Quebec, Rigaud was hit with extensive flooding while other areas are considered high risk of flooding such as Ahuntsic-Cartierville, Sainte-Anne-de-Bellevue and Laval. In Ontario, the Dundas / Hamilton area suffered from significant flooding and mudslides.

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Coming Soon: Suite of Measures to Address Housing Affordability in Toronto

Yesterday, three levels of government – Federal Finance Minister Bill Morneau, Ontario Finance Charles Sousa and Toronto Mayor John Tory – met to discuss what can be done about rising house prices in Toronto. To address these concerns, Mr. Sousa is expected to unveil a “suite” of some 10 different measures to tackle housing affordability, ranging from rent controls to a new tax on real estate speculators and enhanced transparency surrounding the bidding process to protect both buyers and sellers. These will be announced shortly, possibly before Mr. Sousa tables his Ontario budget next week.

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Royal LePage: Insights into the Vancouver and Toronto Housing Markets

Royal LePage released its latest House Price Survey today, which is powered by Brookfield RPS. While home price appreciation in Greater Vancouver has fallen since the B.C. government’s foreign buyer tax, Royal LePage says this may be short-lived, with a risk of “market whiplash” as six months of pent-up demand is unleashed on the market. “The hasty introduction of new real estate-related regulations or taxes in Ontario, in the absence of data and analysis to support these policy moves, could lead to a sharp price correction, impacting not only household wealth, but damaging the broader Canadian economy as well,” said Royal LePage President and CEO Phil Soper.

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Emergence of a Private Securitization Market?

The government may be getting its wish. For years, the Department of Finance and other government agencies have been trying to encourage an uninsured residential mortgage-backed securities (RMBS / private securitization) market, to no avail. That may be changing however. This week BMO announced that it is bundling prime, uninsured residential Canadian mortgages into securities (about $2 billion) and MCAP is supposedly in discussions about an initial tranche of alt-A mortgages totalling $100 million. Could this be the start of an investor-driven, liquid RMBS market?

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The BoC on Interest Rates, Housing and Household Debt

This week, the Bank of Canada announced that it is maintaining its target for the overnight rate at 1/2 per cent, however, it still has its eyes on a rate hike in the next couple of quarters. The Bank is expecting the housing market to slow overall, but expressed concerns about the GTA entering a phase in which speculation is playing a larger role.

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OSFI: Next Steps for Canada’s Bank Capital Regime

This week, OSFI Superintendent Jeremy Rudin presented at a CD Howe event about “Waiting for Basel? Next steps for Canada’s bank capital regime”. His speech provides interesting insights into OSFI’s top priorities and approach to addressing important issues that it says have not yet been addressed by Basel III.

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RBC Building Customer Rewards System on Blockchain

The Royal Bank of Canada plans to deploy a real-time customer rewards system this year built on a blockchain online ledger, according to the Wall Street Journal. The goal is to let users of RBC’s credit cards collect and redeem rewards points instantly after completing qualifying transactions at retail stores and other merchants.

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[RBC] Housing Affordability Trends

RBC’s latest Housing Trends and Affordability report shows that at the national level, housing affordability remained strained in Canada but did not get any worse in Q4 2016. Despite this, pockets of concern remain, such as the Toronto-area, which RBC calls a “high-risk” zone and bound to intensify in the short-term, while Vancouver continues to face the highest affordability hurdle in Canada ”by a long shot”. Other exceptions include Calgary (better-than-usual affordability) and Victoria (more strained than it has been historically). In the majority of other markets in Canada, affordability levels remain close to historical norms and affordability is unlikely to be a constraint in other parts of Canada going forward.

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Investor Demand Estimates and Their Impact on Home Prices in the GTA

A study done in March 2017 by Realosophy, attempted to measured investor demand by looking at the number of houses being bought and immediately rented out. It found that this subset accounted for 10% of all sales in the GTA real estate market, and largely based on this, the company estimates that all investors could be responsible for as much as 25%-30% of all sales.

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What’s the Take on the Federal Government’s 2017 Budget?

What’s the take on the Federal Government’s 2017 Budget by the economic groups of the Big 5 Banks? The titles of recent reports provide a good sense: BMO: Beauty (Better Economy) & the Beast (Big Deficit); CIBC: Budget 2017/18: Same Numbers, More Details; RBC: Stay the Course Budget – Expected and Delivered; Scotiabank: No Surprises, No Market Impact Anticipated; and TD: Back to Business as Usual.

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