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

T-Birds make the leap into rugby provincials

Strong first half helps Cowichan beat Belmont Bulldogs

LAKE FLASHBACK: Water troubles and hopes for a full-time theatre take centre stage this week

Lake didn’t want meters, and Youbou didn’t want publicly owned water while Players wanted Brown House

75th Anniversary Run remembers Second World War tragedy on Mount Bolduc

Transport was provided by ATV through the members of Cowichan Valley ATV Club

Chris Wilkinson column: How does showing appreciation make you feel?

How much time and (more importantly) energy do you feel you have left to appreciate someone?

Duncan runner Taryn Smiley reaches NCAA track prelims

Missouri State athlete can qualify for national finals

600 new campsites coming to provincial parks and recreation sites across B.C.

Tourism Minister announced half of the new spots to 13 most popular provincial parks

Coming up in Cowichan: From bike rodeo to ‘A Word About Consent’, lots on the calendar

Christian Science event coming to Duncan Saturday, May 25 “Breaking News: Freedom… Continue reading

B.C. Supreme Court dismisses review around ferry workers’ right to strike

B.C. Ferry and Marine Workers’ Union collective agreement expires November 2020

Municipalities protest after B.C. declares marijuana crops ‘farm use’

UBCM president seeks answers in letter to John Horgan government

CMHC defends mortgage stress test changes amid calls for loosening rules

Uninsured borrowers must now show they could service their mortgage if rates rose two per cent

B.C. woman left ‘black and blue’ after being pushed off 40-foot cliff at lake

West Shore RCMP looking for witnesses as investigation continues

Thunderstorms to bring heavy rain, risk of flash floods in the southern Interior

Ten to 30 millimetres of rain to fall over the early weekend

Unbe-leaf-able: Agassiz man finds more than 200 four-leaf clovers in a month

Walt Hardinge has found more than 219 four-or-more leaf clovers this spring alone

Crews fight fire with fire to keep blaze from northern Alberta town

The wildfire now covers some 920 square kilometres

Most Read