Bank of Canada raises overnight rate target by 1/4 percentage point to 4 1/2 per cent

OTTAWA – The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 4 1/2 per cent. The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 4 3/4 per cent.

Economic growth and inflation in Canada in the first half of this year have been stronger than expected in the April Monetary Policy Report (MPR). Final domestic demand has remained the key driver of economic growth in Canada, bolstered by firm commodity prices. The Bank judges that the economy is now operating further above its production potential than was projected at the time of the April MPR. Both total CPI and core inflation have been higher than projected in April and are above the 2 per cent inflation target. Longer-term interest rates have increased and the Canadian dollar has appreciated sharply, moving well above the trading range assumed in the last MPR.

The Canadian economy is now projected to grow by 2.5 per cent in 2007, somewhat stronger than was expected in April, and to grow somewhat more slowly in 2008 and 2009 than previously projected. In this new projection, higher interest rates across the yield curve and a higher assumed range for the Canadian dollar of 93 to 95.5 cents U.S. act to moderate growth in 2008 and 2009 to an average of about 2 1/2 per cent. This brings aggregate demand and supply in Canada back into balance in 2009.

Inflation is projected to be slightly higher and more persistent than in the April MPR. However, as excess demand diminishes, total CPI and core inflation should decline to 2 per cent by early 2009.

There are both upside and downside risks to the Bank's inflation projection. The main upside risk is that household demand in Canada could be stronger than expected. The main downside risks are related to the higher Canadian dollar and the ongoing adjustment in the U.S. housing sector. In the context of the Bank's new projection, these risks appear to be roughly balanced.
In line with this outlook, the Bank is raising the target for the overnight rate to 4 1/2 per cent. Some modest further increase in the overnight rate may be required to bring inflation back to the target over the medium term.

An analysis of the Bank's outlook for growth and inflation, including economic and financial developments and risks to the projection, will be set out in the Monetary Policy Report Update, to be published on 12 July 2007.Information note: The Bank of Canada's next scheduled date for announcing the overnight rate target is 5 September 2007.

Best June Ever

TORONTO - Friday, July 6, 2007 -- Last month the Toronto Real Estate Market recorded 10,451 sales for the best June performance ever, Toronto Real Estate Board President Donald Bentley announced today. "June's figure was up almost 20 per cent over the 8,730 sales recorded during the same month in 2006, and down only slightly (six per cent) from May's best-ever figure of 11,146 sales. To get some idea of the current strength of the market: there have been more sales in the last two months (21,597) than occurred in all of 1977 (20,512), thirty years ago this year."

While the sales pace remained brisk, average prices declined marginally (less than one per cent) from May to $383,963. The year-to-date average was $373,719, up five per cent over the first six months of 2006 ($356,977).

"Price increases remain only modest," noted the President. "Inventory, at 21,789, is robust enough to keep a lid on upward inflation. The current market is still accessible to first-time buyers, and should continue in this mode for the foreseeable future."

Breaking down the total, 3,936 sales were reported in TREB’s 28 West districts and averaged $351,513; 1,819 sales were reported in the 14 Central districts and averaged $513,491; 2,248 sales were reported in the 23 North districts and averaged $406,565; and 2,448 sales were reported in TREB’s 21 East districts and averaged $302,558.

Neighbourhood Corner

Etobicoke
In Etobicoke (W-6 to W-10) there have been 2,734 sales to date, up 13 per cent over the January to June period of 2006. The average price was $399,525, up four per cent over the $383,220 recorded during that earlier time frame.

Summer market begins with a bang

TORONTO, July 6th, 2007-- In June, the Toronto Area resale housing market was nearly 20 per cent more active than a year ago, Toronto Real Estate Board President Donald Bentley announced today. The 10,451 sales recorded in the month were also just shy of the 11,146 sales that made May TREB's most active single month ever.

"This market is very healthy and shows no signs of letting up," Mr. Bentley said. "The strong spring we've seen is carrying through to the summer months, and that has helped to push this year's total activity past 2006 by nearly 11 per cent."

Toronto's Danforth / Woodbine Heights area (E03) saw overall transactions jump by 32 per cent compared to last June, with gains across most housing types.

Strong sales of condominium apartments and town homes in Mississauga's Northwest Cooksville (W15) area contributed to an overall increase in activity of 57 per cent compared to June 2006.
Detached home sales in Bayview / Hillcrest Village (C15) nearly doubled as overall transactions increased by 39 per cent compared to June of last year. Just north of the city, Richmond Hill's southern portion (N03) saw a 48 per cent increase in transactions compared to the same timeframe one year ago.

"The current market is exceeding expectations because it has very solid fundamentals to build upon," TREB's President added. "We have seen good returns on investment, and a strong economy and low borrowing costs have kept homes accessible. It's a great time to be in the market."

More Toronto Real Estate information and market news: www.househuntingintoronto.com.

No To Second Land Transfer Tax

TORONTO, July 5, 2007 -- Toronto’s REALTORS® have launched a web site (www.nohomebuyingtax.com) to help the public calculate what the proposed Toronto land transfer tax will cost them and to easily allow the public to let Mayor Miller and City councillors know what they think.

“As REALTORS®, it’s our job to give information to the public. As soon as we tell them about the City’s proposal to charge a second land transfer tax they ask us what it will cost them and what they can do to stop this bad idea. Our new web site shows them the exact cost of the tax and allows them to easily email the Mayor and City Councillors,” said Donald Bentley, President of the Toronto Real Estate Board (TREB).

The www.nohomebuyingtax.com site includes an easy-to-use calculator that tells the user exactly how much land transfer tax they now owe the province and what they will owe the City. In addition, it includes quick facts and easy options for the public to take action.
Even prior to launching the web site, Toronto’s REALTORS® have been communicating with the public to inform them of the City’s proposal. The public is very opposed to this tax and their reaction has been overwhelming.

“We are aware of over 1,000 emails that have been sent to Mayor Miller and all City Councillors, and most of those have come from the public in just the last week, after the City’s Executive Committee decided to push forward with this misguided idea. The public isspeaking; hopefully, City Hall won’t ignore them,” said Bentley.

The emails that have already been sent make it clear that the public believes that the City is headed in the wrong direction.

“Nobody likes taxes, but the public has been adamant that a second land transfer tax is not the right approach to addressing the City’s fiscal challenges because it could make the dream of home ownership more difficult to achieve for home buyers, while impactingproperty values for some current home owners. Generally, the public believes that this tax is unfair, that the City hasn’t justified it, and that the City should first focus on getting its own house in order,” Bentley added.

TREB notes that concern is being expressed by both people looking to buy a home and those who already own a home.

“Even though this tax will be paid by home buyers, current home owners understand that it could make their properties less marketable compared to homes in other municipalities where there is only one land transfer tax. This could hurt their property’s value, whichwould impact seniors the most because many of them rely on their property’s value to help with their retirement”, said Bentley.

TREB points out that the public has also indicated that, instead of focusing on new taxes, the City should continue to make fairer funding from the senior levels of government a priority.
“REALTORS® support a fair deal for Toronto, but City Council is putting the cart before the horse. Charging new taxes will simply let the senior governments off the hook”, said Bentley.