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

Comments are closed

Just Posted

New space secured for Sooke homeless

The shelter will be ready for residents on July 20

Victoria archery club says goodbye to outdoor range in View Royal

Province-owned View Royal property will house handyDART facility

Hotel workers gather in Victoria, demand right to return to work

Workers also asking the government to make sure employers don’t use pandemic to replace them

Sooke homeless camp to stay until a solution is found

To forbid Ed Macgregor camp would go against Canadian Charter of Rights and Freedoms

Horrifying video shows near head-on collision on Trans Canada

The video was captured on dash cam along Highway 1

Elizabeth May endorses Furstenau in BC Greens race

Former federal party leader backs Cowichan Valley MLA

Greater Victoria Crime Stoppers wanted list for the week of July 7

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

Fraser Valley woman complains of violent RCMP takedown during wellness check

Mounties respond that she was not co-operating during Mental Health Act apprehension

B.C. sees 12 new COVID-19 cases, no new deaths

Three outbreaks exist in health-care settings

Lost dog swims Columbia River multiple times searching for home

The dog was missing from his Castlegar home for three days.

COVID-19: B.C. promotes video-activated services card

Mobile app allows easier video identity verification

ICBC to resume road tests in July with priority for rebookings, health-care workers

Tests have been on hold for four months due to COVID-19

Would you take a COVID-19 vaccine? Poll suggests most Canadians say yes

75 per cent of Canadians would agree to take a novel coronavirus vaccine

Most Read