Cooling real estate market to hamper B.C. economy next two years, says think tank

Provincial economy cooling notably following average growth of 3.2% from 2014-17

Photo: Rob Kruyt

As real estate goes, so goes the B.C. economy.

The Conference Board of Canada is forecasting at least two more years of slowing growth ahead for the province amid a cooling real estate market.

The Ottawa-based think tank’s latest provincial outlook, released Wednesday (February 27), estimates real GDP growth in B.C. will fall from 2.6% in 2018 to 2.5% this year.

The Conference Board said that downward trend will continue into 2020 with real GDP growth projected to fall to 2.4%, “despite ongoing megaprojects in the energy sector.”

Last fall LNG Canada announced its five partners had made a final investment decision on the $40-billion project to be based out of Kitimat, B.C.

The project has two main components: the LNG plant and marine terminal in Kitimat, and the $4.8-billion Coastal GasLink pipeline, which is being built by TransCanada Corp. (TSX:TRP) to bring natural gas from northeastern B.C. to Kitimat.

Meanwhile, the province is coming off tremendous economic growth — charting at an average of 3.2% from 2014-17 — fuelled largely by demand for real estate.

The booming real estate market, which has benefitted everything from the construction industry to the banks, also contributed significantly to an affordability crisis for many regions in B.C.

Both Ottawa and Victoria have introduced measures, such as a mortgage stress test and a foreign buyers tax, respectively, to cool the market.

This month the Real Estate Board of Greater Vancouver revealed the region registered 1,103 sales in January — down 39.3% from a year earlier.

“With the housing market slowing, investor approval of LNG Canada’s liquefied natural gas terminal and pipeline in late 2018 came at an opportune time for the province. The first phase of the development will provide a substantial boost to the province’s real GDP between now and the middle of the next decade,” the Conference Board said in its outlook.

“British Columbia will also benefit from construction on the smaller Woodfibre LNG project and the Site C Dam, as well as on several public sector projects, such as the Vancouver International Airport expansion and the Pattullo Bridge replacement.”

—With a file from Nelson Bennett

torton@biv.com

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