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.

Just Posted

EDITORIAL: No think-tank report cards for the Observer

Fraser Institute’s annual school ranking isn’t a good measure of success, editor Grace Kennedy writes

LETTER: Why is Jati Sidhu ashamed of his riding?

Lytton’s Christopher di Armani shares his dismay at the potential name change of the MP’s riding

Fraser-Cascade School Board votes to invest in protecting the future of its students’ hearing

Decibel monitors to be installed in secondary schools’ machine shops as a visual guide

Kent-Harrison Foundation celebrates 25 years

The foundation started in 1994 on the promise of a two-for-one donation deal

Bucket-list flight for Chilliwack grandmother

Hampton House resident treated to a beautiful plane ride in Moments that Matter

Harrison Hot Springs students bring ‘Twelfth Night’ to life

The adaption of Shakespeare’s classic comedy include songs and phrases from Canada’s east coast

Sparks fly as SUV speeds down wrong side of Highway 1 trying to flee RCMP

Captured on video, the vehicle headed westbound against oncoming traffic before crashing

Fundraising campaign launched for man caught in SilverStar avalanche

In only two days, the GoFundMe surpassed its $15,000 goal

B.C. doctor reprimanded for accessing medical records without consent

Doctor admits to accessing records of the woman carrying his child

Video service to compete with Netflix, Amazon expected from Apple on Monday

The iPhone has long been Apple’s marquee product and main money maker, but sales are starting to decline

Edmonton judge to rule on whether Omar Khadr’s sentence has expired

Canada’s top court ruled punishment handed Khadr for alleged acts committed in Afghanistan when he was 15 was to be a youth sentence

Kootenay city councillor starts nationwide climate caucus for municipal politicians

Climate Leadership Caucus has 57 members including seven mayors

Trudeau delivers campaign-style speech while introducing candidate Taggart

The Order of British Columbia recipient said she wants to be the people’s voice in Ottawa

Stolen Bentley spotted going wrong way down highway found in Summerland

The car has been recorded going the wrong way on the Coquihalla, found two days later

Most Read