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

Langley’s Glass House Estate winery has new owners

Joseph Richard Group purchases family-owned business

Mystery plane wakes up Langley residents

An aircraft circled Langley City over the weekend after midnight for about an hour

Teen who fires airsoft pistol into sports field prompts large police response

Takedown occurs Monday night on Trethewey Street in Abbotsford

Theatre group hosts ’50s-inspired jazz night fundraiser

The Royal Canadian Theatre Company is fundraising for youth programs.

Convicted pedophile from Langley raises fears after move to Ontario

Police have issued a warning about Madilyn Harks in Brampton

VIDEO: 13-year-old killed in B.C. crash that involved five kids

The children range in age from six to 17.

In a fight against cancer, Victoria man’s only stem cell match was his own donation

More mixed race and Asian stem cell donors needed, says Victoria family

MPs denounce leaked reports of Trudeau-JWR clash over Supreme Court pick

Opposition MPs called the leaks an act of desperation meant to smear Wilson-Raybould

Study says B.C.’s housing policies mean drug users can be targeted for eviction

The study involves 50 people living in Vancouver’s Downtown Eastside

VIDEO: Homicide team called in after three killed in Surrey car crash

Investigators ask public to come forward with information, dashcam video

Stranger climbs onto B.C. family’s second-floor balcony, lights fire in barbecue

Incident in Abbotsford terrifies family with two-year-old boy

UPDATED: Sailings resume after BC Ferries boat hits Langdale terminal

The Queen of Surrey is stuck on the dock, causing delays to Horseshoe Bay trips

Eviction halted for B.C. woman deemed ‘too young’ for seniors’ home

Zoe Nagler, 46, had been given notice after living in the seniors complex in Comox for six years

Coroner’s inquest announced for Victoria teen’s overdose death

Elliot Eurchuk was 16 years old when he died of an opioid overdose at his Oak Bay home

Most Read