09:11 AM EDT, 09/25/2024 (MT Newswires) -- Canada's housing has been "stagnant" in recent months as prices have meandered, home sales have stalled and renovation activity has been sluggish, said David Doyle, head of economics at Macquarie.

One bright spot has been an improvement in the trend in starts, noted Doyle. In the near term, the economist anticipates sideways activity should persist.

While downside risks could flow from a further deterioration in the labor market, Macquarie suspects this would be limited due to the Bank of Canada''s policy response.

Doyle expects activity to improve in 2025. By this stage, BoC rate cuts should prove substantial enough to drive a "modest" cyclical upturn. Recently announced Canadian federal government measures extending amortization periods for first-time homebuyers and increasing the price cap on insured mortgages should provide a further boost.

The extent of improvement, however, is likely to prove modest with offsetting headwinds from i) a continued mortgage renewal headwind and ii) a shift in immigration policy that will sharply slow population growth ahead and result in a gradual reduction in the housing underbuild through 2027, added the economist.