Biggest investment drop is forecast to happen this year. (Central 1 Credit Union)

B.C. housing slump has begun to slow economy, credit union economists say

Central 1 not predicting recession, but ‘sharp contraction’ in construction

Government moves to put the brakes on B.C.’s urban housing costs are taking hold and are about to produce the biggest drop in residential construction since 2009, Central 1 Credit Union says in its latest forecast.

The drop in housing investment is projected to be nearly as large as the world-wide recession of 2009, but will not signal a recession in B.C. because of strength in other construction sectors, says B.C. Economic Outlook 2019-2021, a forecast by the organization representing credit unions in B.C. and Ontario.

Increasing population, new capital investment in public works and the LNG Canada liquefied natural gas project in northern B.C. are expected to keep unemployment low as housing construction slows, Central 1 forecasts.

“B.C.’s economy will slow over the next three years as the policy-induced housing market downturn weighs temporarily on growth,” the report says.

“The recent slump in housing demand and prices will trigger a sharp contraction in housing construction and the most pronounced drop in broader residential investment since 2009. Growth will trend in a range of 2.0 to 2.5 per cent over the next years and accelerate to 2.8 per cent in 2021.”

The federal government’s addition of a “stress test” for bank mortgages in 2018 has required borrowers to qualify their ability to pay if interest rates increase, after a long period of low rates led to personal debt rates rising. B.C. has focused on increased taxes for foreign buyers and second homes in urban areas that have low rental vacancy rates and high purchase prices.

READ MORE: Deadline looms to register to avoid speculation tax

READ MORE: Drop in fixed mortgage rates a ‘welcome cooling’

“Retrenchment has been significant in larger urban markets, which will curtail new home activity in 2019,” the report states. “Home sales have fallen to a multi-year low pace.”

Central 1 expects that B.C. exports will be a drag on growth, with the continued trade dispute between the U.S. and China and a general trend to trade protectionism internationally.

Retail sales rose “a mere two per cent last year following a 9.3 per cent increase in 2017 and 6.6 per cent gain in 2016, despite support from rising wages, solid labour market and population growth,” Central 1 says.


@tomfletcherbc
tfletcher@blackpress.ca

Like us on Facebook and follow us on Twitter.

BC legislature

Just Posted

Delacourt: For Trump, the coronavirus is about trade

President’s mask action and Canada’s response were most predictable

Nanaimo man, allegedly drunk and high, arrested after climbing 100-foot tree

Man in sandals climbs fir tree, hurls obscenities at police below

Timeline pushed back for Tofino-Ucluelet highway construction project

Ucluelet mayor Mayco Noel said the ministry’s announcement came as “no surprise.”

Victoria Fire Department investigating explosion at supportive housing complex

The explosion blew out a window and caused damage to the frame of the building

Conservation: Two elk unlawfully shot in Northern Vancouver Island

‘The elk also did not have all of the edible portions of meat removed’

COVID-19: 4 new deaths, 25 new cases but only in Vancouver Coastal, Fraser Health

A total of 1,291 people have tested positive for the novel coronavirus

442 squadron to perform fly-by over Comox Valley hospital to salute COVID-19 workers

Cormorant helicopter will fly over the hospital at 7 p.m.

Escaped python found in Saanich building reunited with its owner

The little snake is at ‘home, safe and sound,’ CRD chief bylaw officer says

Police watchdog clears West Shore RCMP in altercation that led to man needing 82 staples

The man pretended he had a weapon he would use against the police

Victoria police seek public’s help finding man missing more than a week

Joel Diment 26 and has short brown hair and hazel eyes

Comox spring training cancelled for Snowbirds next month

The team announced that due to ongoing travel restrictions they will not be training in the Valley

Mid-Island Panago locations offer free pizza to first responders

First responder can get free pizza at Panago in Parksville, Nanaimo, Ladysmith, Duncan, and Mill Bay

COVID-19: Don’t get away for Easter weekend, Dr. Bonnie Henry warns

John Horgan, Adrian Dix call 130 faith leaders as holidays approach

COVID-19: Trudeau says 30K ventilators on the way; 3.6M Canadians claim benefits

Canada has seen more than 17,000 cases and at least 345 deaths due to COVID-19

Most Read