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

Cyclist struck by vehicle in Abbotsford

Incident took place Friday morning on Bevan Avenue

UFV introduces first mindfulness graduate program in Canada

Most of the University of the Fraser Valley program is offered online

Brewery, lounge proposed for downtown Mission

Council votes to support liquor license request

Mission Stars win third straight bantam provincial title

Mission defeats Tri Port 5-2 in final, midgets take home provincial silver

B.C. Wildfire crews respond to Sts’ailes, Morris Valley fires

A fire at the First Nation and a grass fire in Mission sent smoke across the valley Wednesday

VIDEO: Bentley nearly causes crash going wrong way on Coquihalla

Bentley driver allegedly travelling at high speed

WATCH: Popular Glow festival faces cancellation in dispute over farm land

Langley’s Darvonda Nurseries received a compliance assessment notice from the ALC on March 5.

B.C. fire department offers tips to keep your home safe during wildfire season

With wildfire season getting closer, the Penticton Fire Dept. offer tips to keep your home safe

South Surrey mother guilty of second-degree murder in death of daughter

Lisa Batstone killed eight-year-old Teagan in December 2014

Fierce feline spotted as ‘aggressor’ in face off with coyote in B.C. backyard

North Vancouver resident Norm Lee captures orange cat versus coyote in backyard showdown

Wilson-Raybould to reveal more details, documents on SNC-Lavalin affair

Former attorney general has written to the House of Commons justice committee

Anti-discrimination group wants to map offenders with cross-Canada hate atlas

Morgane Oger Foundation issues call for volunteers to help build Canadian Atlas of Populist Extremism

Kater to launch ridesharing service in Vancouver by end of month

The Surrey-based company got its permits from the Vancouver Taxi Association

Most Read