Just a few months ago analysts were predicting that Canada would not slump into recession and that although the property market was slowing it would weather the global storm better than others.
Now the Canadian economy is officially in recession and in what some describe as a panic move The Bank of Canada has unexpectedly cut its key interest rate by 0.75% to a 50-year low of 1.5%.
'The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated,' the bank said in a statement.
Real estate agents are not hopeful that the move will have any effect. One problem is that sellers are not accepting that prices need to fall in order to achieve a sale. Agents say they are reluctant to cut the asking price.
They also report that buyers are sitting on the sidelines wondering if prices will fall further while sellers who are not pressed to make a deal are prepared to wait. And they are warning clients against accepting an offer that's conditional on the sale of another property.
'Sellers are not adjusting to the need to change. And those who do drop the price are still not seeing anyone making an offer. It is that bad,' said Daniel Eliadis of Royal LePage Real Estate Services Ltd in Toronto.
On top of this financial companies are becoming more stringent in granting approval for mortgages, he added.
Asked if the latest rate cut would help he added; 'It won't make much difference,' he replied.
