The housing market giveth and the housing market taketh away.
A new economic forecast from Central 1 Credit Union predicts growth in the B.C. economy is poised for a slowdown as the white-hot housing market finally takes a breather.
GDP growth is estimated to reach 2.5-3% in 2018-20, according to a report released November 20.
That’s down from 3.8% growth in 2017 and comes at a time the province has been averaging growth of more than 3% since 2014.
“The main drag on the economy will be a slower housing market, reflecting the ongoing impacts of rising interest rates and the introduction of the federal mortgage ‘stress test’ and provincial government tax policies to slow demand,” the forecast stated.
“Recent declines in the volumes of home sales are contributing to flatter retail sales trends. The declines are expected to contribute significantly to lower housing construction trends through to 2020, particularly in the larger urban markets in the South Coast region of the province.”
But the broad economic environment and outlook remains solid, according to Central 1.
The report pointed to the construction of LNG Canada’s $40-billion liquefied natural gas plant in Kitimat, B.C., and the pipeline linking it to the region as a big factor providing a lift to the economy.
“A turnaround in the economy is forecast for B.C.’s northern areas as activity ramps up on the LNG plant, triggering growth in construction, employment and regional spending,” the forecast stated.
“Project employment will be felt across the northern interior as workers are drawn from various B.C. communities.”
