Will Vancity Real Estate Feel the Brexit?

There’s no doubt that the surprising result of the British referendum rolled out seismic waves that tumbled across the Atlantic and onto Canadian shores. After the initial shock sent stock markets plunging, along with the British pound and a number of commodity prices, it was time to begin asking the question: Will Canada feel the Brexit?

As part of the Commonwealth we are uniquely tied to Britain. But how Britain cutting ties with the EU will affect us is, at least at the moment, probably a matter of opinion or guesswork at best. Currently, the consensus seems to be that the initial impact will show itself as lower interest rates with the Fed, believed to be readying for a hike in interest rates this September, doing as little as possible. BMO chief economist, Douglas Porter, along with a senior economist, reported that the immediate concern for Canada’s economy will be increased pressure to keep interest rates low, citing the close to $16 billion worth of products we export to the U.K. every year as reason enough.

Pamela Alexander, CEO at the Ontario-Atlantic Canada division of real estate franchise REMAX, mirrored this sentiment, mentioning that low interest rates are, “very good for the housing market.”

Some people have reported that we should expect far fewer Brits on our shores. In times of financial uncertainty, it’s always the “non-essentials” like travel that go first, after all. But looking at a bigger picture, whether or not we lose tourism dollars as Brits hang tighter onto their wallets, some have predicted the opposite scenario when it comes to real estate.

In a tumultuous economy, people are looking for sound investments — and Canadian real estate definitely fits the bill. There is the possibility that all the uncertainty will be a catalyst for Brits looking to put their money somewhere, not even as an investment income property but simply to park it safely for the time being. Piggybacking on that idea, the country’s bigger markets like Vancouver may not even feel the surge if Brits go house-hunting closer to home on the east coast.

Naturally there are those who have predicted the polar opposite–claiming that the low interest rates (and as a result low mortgage rates) will boost Vancouver and Toronto housing markets; sending these already sizzling hot markets into the stratosphere. BNN also reported similar sentiments, running an article on how the Brexit could add fuel to our hottest markets by throwing “cheap money” on the fire. “If you believe foreign money is to blame for unaffordability, a low loonie ensures Canadian real estate remains on sale for rest of the world,” the article said. This of course is assuming that the traditionally strong housing market does not suffer the massive correction everyone seems to be talking about in Ottawa.

If the European Union was our time’s Great Experiment, Brexit is its less enviable cousin. With no way of knowing how long the exodus of Britain from the EU will take, nor how the markets will react over the long-term, it seems that speculating is becoming a spectator sport. But the real question here will be whether we win or lose, are we ready to play the game?

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About Atrina Kouroshnia

Atrina Kouroshnia is an independent, licensed, mortgage broker in the province of British Columbia. She has a degree in Human Relations & Commerce, and past work experiences in HR & Real Estate Development. She comes to the table with great customer service and problem-solving skills. Her approach to finding the best mortgage solution involves both short and long-term planning, making sure her clients are in a suitable mortgage that is flexible to their needs.