Toronto Income Property Newsletter: July 2016

The United Kingdom’s historic decision to leave the European Union has had immediate and rather drastic results. The value of the British pound dropped to lows not seen since 1985, the Dow fell more than 500 points, and Prime Minister David Cameron resigned shortly thereafter.

The unprecedented referendum has inserted worldwide uncertainty into the global economy, including residential real estate in Toronto. Some are claiming that the Brexit might actually have a positive impact on the real estate economy of Toronto, which has been a relatively stable place to store wealth. I think it is too early to tell and it is difficult to pin one single factor to swings in what is already a very hot market.

“For the next two years, the European Union and Britain are going to be sorting out what this means,” noted attorney Marc Landis, managing partner and chair of the Real Estate Department at Phillips Nizer, LLP. “There is continued economic uncertainty and cultural uncertainty, and while all those things are happening, Canada in general, and Toronto in particular look like an even better place to invest your money than before.”

On a more cautious note, Bank of Canada governor Stephen Poloz has warned that unexpected global events can destabilize a weakened Canadian economy, like a cracked tree in your backyard. "If the right storm comes along and knocks it onto your neighbour's house, you've got a problem," said Poloz. If interest were to be raised by Poloz that would likely have an immediate effect on the real estate markets across Canada.

There has been a lot of international demand for real estate in Toronto. It’s not like we need any more external influences to heat up our market, but it will certainly be interesting to see what overall effects this will have. Some say a Trump presidency can also have an impact on our market – that’s one I’m sure I will examine in more detail in the upcoming months.