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

Okanagan-Shuswap Weather: Most long-weekend rain has already fallen

A mix of sun and cloud is expected for the last two days of the the Victoria Day weekend.

Update: Mother dead, youth in critical condition after carbon monoxide poisoning at Sandy Point Campground

The woman was found unresponsive insider her tent and the youth was taken via air ambulance to hospital

Penticton Indian Band councillor trying for federal seat

Joan Phillip acclaimed as NDP candidate for Central Okanagan-Similkameen-Nicola

Former Greyhound bus drivers gather in the Okanagan for one last hurrah

Bash kicks off Friday in Penticton and runs until Sunday

Some South Okanagan students are $1,000 richer

Million Dollar Bursary Program offers bursaries each year to Interior Savings’ young members

Weather holds up for Rutland May Days

60th annual May Day midway, market and entertainment saw hundreds of attendees

Raptors beat Bucks 118-112 in 2OT thriller

Leonard has 36 points as Toronto cuts Milwaukee’s series lead to 2-1

South Okanagan runners take top spots in Peach City RunFest

Both the top male and female half-marathon winners were from Penticton

Former Greyhound Canada employees gather in Okanagan to say a final farewell

“Greyhound may take our jobs but they will never take our friendships,” says former bus driver

Kelowna firefighters douse blaze in hedges

The cause of the fire on Renfrew Road is under investigation.

‘Teams that win are tight’: B.C. Lions search for chemistry at training camp

The Lions added more than 50 new faces over the off-season, from coaching staff to key players

Rescue crews suspend search for Okanagan kayaker missing for three days

71-year-old Zygmunt Janiewicz was reported missing Friday

Okanagan Springtime Regatta draws more than 50 sailboats

Sailors treated to windy, excellent long weekend conditions on Okanagan Lake in Kelowna

B.C. VIEWS: Reality of our plastic recycling routine exposed

Turns out dear old China wasn’t doing such a great job

Most Read