When it comes to Surrey’s economy, you can’t talk about the city’s exponential growth without real estate entering the conversation, says one of Canada’s leading economic forecasters.
“The housing market is key,” said David Tulk, chief Canada macro strategist with TD Securities. “That’s one area, looking at how well it’s performed. And it does feel stretched, and [there is] pressure on a region like Surrey where there are a lot of people coming in, so the prices are pushed up even higher.”
Tulk, who spoke September 24 at a Surrey Board of Trade event, said he has “mild concerns” when it comes to Surrey’s real estate sector, which is trying to keep pace with the city’s population boom.
“As those mortgages for first-time mortgage owners, they start to flip over, five years, the interest rates will be higher. I mean they won’t be as high as we’ve seen in previous economic cycles but that does create a little bit of concern. Especially if those are borrowers that feel somewhat stretched trying to get into their first home in the first place. So I think that’s an area of concern.”
But the chances of a U.S.-style housing correction are low for Canada’s real estate market, he said. And Surrey Board of Trade chairman Gerard Bremault sees silver-lined promise in Tulk’s forecast, especially when it comes to Canada-U.S. trade relations and, more specifically, Surrey’s place within that conversation.
“Given our proximity to the border and the amount of border trade, that strikes me as hopeful. I have some concerns in terms of the analysis of how the Canadian dollar may go, and the sensitivities there to our trade relationships with the U.S.”
Tulk said U.S. economic headwinds will help support Canada’s economic recovery heading through the second half of 2014, and that when it comes to major international markets, the U.S. is the “cleanest dirty shirt” in comparison to others, including Europe, Japan and China.
“To be honest, it can’t come soon enough to see the United States begin to get its act together,” he added. “There’s obviously been quite significant structural headwinds that have really hurt the U.S. in recent years. So now that that’s starting to turn, it does definitely benefit Canada.”
