In June, Canada’s housing price index fell by 0.2%, indicating a 1% decrease over the year.
by VT Markets
/
Jul 23, 2025
Canada’s housing price index for June 2025 fell by 0.2%, the same drop as the previous month.
In the past year, it has declined by 1%. In June 2024, the index was at 124.7, and it is now at 123.4.
Implications For Bank Of Canada Policy
According to Michalowski’s data, the ongoing weakness in Canada’s housing market signals that the Bank of Canada may adjust its policies. The falling prices suggest the bank might continue to ease monetary policy. As a result, there is a higher chance of an interest rate cut in the next quarter.
This housing data is part of a larger trend of economic slowdown. The latest jobs report showed the unemployment rate rising to 6.2%, while inflation has dropped to 2.7%, which is comfortably under the central bank’s target. Together, these figures support a more cautious approach to stimulate the economy.
Given this information, we recommend preparing for a weaker Canadian dollar. Buying call options on the USD/CAD pair could be beneficial, as a more accommodating Bank of Canada is likely to weaken the currency against the U.S. dollar. This move anticipates a growing difference in interest rates between the two countries.
Historical Context And Strategic Moves
Looking back, the central bank has typically responded strongly to declines in the housing market. During the 2018-2019 slowdown, policymakers paused rate hikes and adopted a more cautious stance, which helped stabilize the market. We expect a similar, potentially stronger response today as rate cuts have already begun.
This situation could also hurt the profits of Canada’s largest banks, leading to slower mortgage growth. A smart strategy would be to consider buying put options on a Canadian banks ETF, like ZEB. This would allow for profits during any downturn in the financial sector tied to the real estate market.
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by VT Markets
Jul 23, 2025
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