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.

Just Posted

‘Listen to your body:’ Saanich woman fights to have breast implants removed

Woman struggles to find doctor to remove Allergan textured implants, recently linked to rare cancer

Police find shoes, backpack of the man found dead in Saanich

Officers credit public’s help, continue to seek information

Victoria Police seize drugs, replica firearms and $50,000 in cash after searching Victoria home

A property in the 600-block of Manchester Avenue is focus of investigation

Saanich approves new eight- and 11-storey residence buildings for UVic

Residents also supported the environmentally friendly residences

Federal government funds 60 ‘micro-loft’ rental units set to open on Fort Street

The Sawyer Block at 840 Fort St. will house affordable units and a small amount of retail space

VIDEO: Come along for the ride on Tour de Victoria

Reporter captures video footage of his Tour de Victoria ride

POLL: Should there be a ban on gas-powered leaf blowers?

We’ve all heard them, and most likely cursed them under our breath.… Continue reading

Greater Victoria wanted list for the week of Aug. 23

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

Vancouver Island RCMP hunt for man after pair of indecent exposure incidents

Elderly Qualicum Beach woman grabbed by man who had been masturbating in the woods

Bodies of two missing Surrey men found near Ashcroft

Ryan Provencher and Richard Scurr have been missing since July 17

Pile of wood mulch ‘spontaneously combusts’ at Vancouver Island industrial site

Business owner thanks fire department for quick response

Five hedgehogs quickly adopted after being left at BC SPCA

Lucky new owners picked up their pets from Maple Ridge branch on Aug. 20

B.C. cricket players get interrupted by racist remark

Community has had protocols in place for years to respond to prejudice

Most Read