Ralph Fox, a real estate broker and director of new development at Sage Realty, said he expects there to be little to no impact as a result of falling oil prices because Ontario is relies heavily on the manufacturing sector.
“I don’t expect there to be much of an impact due to oil prices,” Fox said in an interview with REP. “It’s actually good for consumers here because they’ll have more money to spend and feel confident enough to spend.”
He added that the effect of oil prices is more of a pain in oil-producing markets like Alberta and other provinces that depend on oil revenues to generate wealth and maintain a stable market. He also said that with the U.S. becoming energy dependent, it’ll have consequences on the global energy market.
Fox’s comments come after the Bank of Canada announced a 0.25 per cent drop in the interest rate last week, which now rests at 0.75 per cent. The BoC made changes to the overnight rate to prevent Western Canadian markets from entering serious decline due to plummeting oil prices.
“For our 2015 forecast, we could not ignore the potential impact of the steep decline in the price of oil on housing markets across Canada,” Phil Soper, president and chief executive of Royal LePage, said in a recent report.
“In the immediate term we anticipate that the natural slowing of home price appreciation we called for in the third quarter of 2014 will be delayed in Central Canada and accelerated in the West by recent developments in the energy sector.”
Royal LePage, too, expects Toronto to benefit from low oil prices.
“Ontario’s strengthened export economy buttressed by a flourishing U.S. economy and lower Canadian dollar; improved labour market trends; and unsatisfied demand from countless homebuyers who lost out in 2014 GTA bidding wars are expected to carry the all-important 2015 spring market,” the report states.
Meanwhile with interest rates at an all-time low, things should stabilize in Western Canada, according to the BOC.
“However, there is considerable uncertainty about the speed with which this sequence will evolve and how it will be affected by the drop in oil prices. Business investment in the energy-producing sector will decline,” it continues. “Canada’s weaker terms of trade will have an adverse impact on incomes and wealth, reducing domestic demand growth.”
With speculation swirling about the effect of falling oil prices on housing markets in Western Canada, some agents are suggesting the decline will be good for Toronto and the rest of the province.