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

Kitimat resident is Conservative choice for fall election

Claire Rattée is a former Kitimat councillor

Pacific Traverse Energy to start community engagement

The company will reach out to key stakeholders

RCMP again warns public not to drink and drive

New legislation allows police to breathalyze with drivers’ consent

Rio Tinto donates $50K for Shames Mountain chairlift upgrades

The money was used to purchase the chairlift’s bull wheel replacement last summer

Broken axle caused New Hazelton train derailment: TSB

It could happen again without a different way to inspect trains

VIDEO: Iconic ‘snow cone’ takes shape at B.C. park near Clearwater

Snow cone forming at Wells Gray Provincial Park one that would make Disney’s Queen Elsa proud

Indigenous leaders, politicians say Trans Mountain report flawed

The National Energy Board has endorsed an expansion of the Trans Mountain pipeline a second time

UPDATE: Reports of rashes prompt closure of all Harrison Hot Springs pools

Public pool available after Fraser Health shut down all five mineral pools until further notice

Legislation to protect B.C. farmland comes into effect

Regulations enhance food security, encourage long-term farming

Have you heard the legend of Shuswaggi, the Shuswap Lake monster?

Witness accounts as old as 1904, and as recent as 2018, place a creature in the lake’s depths

UPDATE: B.C. ticket holder winner of $25.9-million Lotto Max jackpot

Next draw set for Mar. 1 with an estimated jackpot of $10 million

B.C.-based ‘Team Tardi’ brings home gold in junior curling worlds

In a 9-4 victory over Switzerland, a Langley-based curling team earned its 2nd straight world title

People gather for funeral of seven children killed in fast-moving Halifax fire

Traditional portion of the service will be followed by words from community members

B.C. weavers to help Alaska Native project honouring survivors of violence

Dozens of Chilkat and Ravenstail weavers from all over North America will be weaving 5-inch-by-5-inch squares

Most Read