Townhouse construction in the Lower Mainland. (Black Press)

Housing slowdown forecast to cool B.C. economy

Conference Board says pipeline, trade uncertainty affecting investment

The B.C. and federal government’s efforts to cool an overheated urban housing market are working, and that’s among the factors leading to a slowdown in B.C. economic growth, the Conference Board of Canada says.

The board’s latest provincial outlook predicts “weaker but still above-trend” growth of 2.1 per cent for 2018 and 2019, after growth above three per cent between 2011 and 2017. It calculates that one third of that growth was due to residential housing investment.

“The double-digit increases in B.C. housing starts in 2015 and 2016 were linked to several factors, including rock-bottom mortgage rates, rapid population growth and tight supply,” the report says. “The pace of expansion was unsustainable, and new tighter mortgage rules and several housing market taxes implemented in the provincial government’s 2018 budget have resulted in a sharp slowdown in activity.”

The B.C. Liberal opposition has been focusing on the projected decline in housing starts, which was also forecast in Finance Minister Carole James’ latest quarterly report.

“Unemployment rates in B.C. remain low, but that’s because the NDP has added 20,000 public sector jobs,” said Shuswap MLA Greg Kyllo, jobs, trade and economy critic for the B.C. Liberals. “From Statistics Canada to this Conference Board report, all signs are showing that we’re on the brink of a real economic downturn here in British Columbia.”

A “speculation tax” on vacant homes in the tightest urban markets is set to take effect in 2019, based on 2018 property values. Local politicians from some of the affected cities, including Metro Vancouver, Kelowna, West Kelowna, Greater Victoria and Nanaimo, called on the province to let cities decide housing taxes, but James said the tax will go ahead as planned.

RELATED: James unmoved by speculation tax concerns

RELATED: B.C. urban housing market ‘moderating’

While home sales in B.C. have slowed considerably, prices were still rising in July, the latest Statistics Canada figures show. The average cost for a new B.C. home rose 1.3 per cent in July. The increase for Victoria was 1.4 per cent and in Kelowna it was 2.0 per cent, compared to 0.5 per cent nationally.

Trade tensions with the U.S. are another factor in slowing economic growth for B.C., the Conference Board concludes.

“The slower growth will be a result of tight labour markets restraining employment growth and of the uncertain outlook for trade and investment attributable to an escalating global trade war and difficulties in obtaining approval for pipelines and liquefied natural gas export facilities throughout the province,” the report says.


@tomfletcherbc
tfletcher@blackpress.ca

Like us on Facebook and follow us on Twitter.

BC HousingBC legislature

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

RDEK encourages Elk Valley residents to prepare for flood season

With spring melt comes rising water levels and an increased flood risk throughout the region

Planting your very own victory garden

The Free Press publisher and gardening expert, Madi Bragg, gives tips for planting

IDES and Salvation Army join forces to create meal program for families in need

Every Tuesday, IDES delivers baskets full of produce and household products to local residents

Angel Flight takes to the skies once more

Angel Flight East Kootenay is once again offering free flights to Kelowna for medical appointments

A second wave of COVID-19 is probable, if history tells us anything

B.C.’s top doctor says that what health officials have learned this round will guide response in future

Dr. Bonnie Henry given new name in B.C. First Nation ceremony: ‘one who is calm among us’

The provincial health officer was honoured in a May 22 ceremony at elementary school in Hazelton

B.C. man with Alberta plates gets car keyed and aggressive note

Some out-of-province people are finding hostile reception due to COVID-19 worries

B.C. drive-in theatre appeals COVID-19 concession rules, 50-car limit

With 50 cars and the removal of concession sales, drive-in owner says theatre might have to close

COVID-19: B.C. grants aim to stabilize sexual assault recovery programs

$10 million fund not yet ready to take applications

B.C. mom’s drug-pricing petition on behalf of son garners thousands of signatures

Petition geared to gaining access to new medicines drew support of Chilliwack-Hope MP Mark Strahl

Introducing the West Coast Traveller: A voyage of the mind

Top armchair travel content for Alaska, Yukon, BC, Alberta, Washington, Oregon and California!

‘Paralyzed by fear’: B.C. woman details anxiety, grief at Italian relief hospital

Sheila Vicic spent two months in Italy as the country grappled with COVID-19

CAMH survey looks at binge-drinking, financial anxiety during COVID

Alcohol may be used as a coping mechanism for those whose careers may have been sidelined due to the pandemic

EDITORIAL: searching for happiness

The Free Press reporter Soranne Floarea explores the meaning of happiness

Most Read