Geoff Cowling

The Canadian economy expanded at a 2 per cent rate in the third quarter, led by strong export volumes. On the downside, household spending slowed, residential investment fell 1.5 per cent and business investment also declined following six consecutive quarterly increases.

Although economic growth was relatively strong in the third quarter, the underlying trends in household spending and in residential and business investment are not encouraging. Those trends, along with a struggling Alberta oil sector, the prolonged impacts of the mortgage stress test, and the recent GM plant closure in Ontario should mean a pause in the Bank of Canada's rate tightening cycle. We anticipate the Bank will hold off on further rate increases until its April 2019 meeting, though inflation at target and the economy growing above trend does mean that the Bank's bias toward a higher policy rate remains in place. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian retail sales rose 0.2 per cent on a monthly basis in September, led by sales in food and beverage stores. Retail sales were higher in 6 of 11 sub-sectors representing 75 per cent of total retail trade.  In BC, retail sales were unchanged on a monthly basis in September and were only 0.7 per cent higher year-over-year.  Provincial retail sales were dragged lower by a nearly 3 per cent year-over-year decline in retail spending in the Metro Vancouver area.

Canadian inflation, as measured by the Consumer Price Index (CPI), accelerated in October to 2.4 per cent after recording 2.2 per cent in September. The Bank of Canada's three measures of trend inflation ticked slightly higher as well with two of the three measures at or above the Bank's 2 per cent target.   In BC, provincial consumer price inflation was 3 per cent in the 12 months to October.  Given an uptick in inflation, there is a higher probability of a rate increase by the Bank of Canada at its next meeting in December, though we still expect the Bank to hold off until early in the new year.

Copyright British Columbia Real Estate Association. Reprinted with permission

Vancouver, BC – November 14, 2018.

The British Columbia Real Estate Association (BCREA) reports that a total of 6,405 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in October, down 26.2 per cent from the same month last year. The average MLS® residential price in BC was $690,161, a decline of 4.1 per cent from October 2017. Total sales dollar volume was $4.2 billion, a 29.3 per cent decline from October 2017.

“The BC housing market continued to grapple with tougher mortgage qualifications in October,” said Cameron Muir, BCREA Chief Economist. “However, more moderate consumer demand has led to a much-needed increase in the supply of homes for sale.”

Total active residential listings were up nearly 30 per cent to 36,195 units in October, compared to the same month last year. While the BC housing market exhibited balanced conditions overall in October, market conditions do vary between regions and by product type.

Year-to-date, BC residential sales dollar volume was down 22.1 per cent to $49.7 billion, compared with the same period in 2017. Residential unit sales decreased 22.8 per cent to 69,664 units, while the average MLS® residential price was up 1 per cent to $713,662.

BCREA 2018 Fourth Quarter Housing Forecast

Vancouver, BC – November 8, 2018. The British Columbia Real Estate Association (BCREA) released its 2018 Fourth Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 23 per cent to 80,000 units this year, after recording 103,768 residential sales in 2017. MLS® residential sales are forecast to increase 12 per cent to 89,500 units in 2019. The 10-year average for MLS® residential sales in the province is 84,800 units.

“The marked erosion of affordability and purchasing power caused by the mortgage stress test and rising interest rates continue to be a drag on the housing demand,” said Cameron Muir, BCREA Chief Economist. “However, continuing strong performance in the economy combined with favourable demographics is expected to push home sales above their 10-year average in 2019.”

Despite the mortgage policy drag on the sector, strong performance of the BC economy continues to be highly supportive of housing demand. Five consecutive years of above trend growth in the province has led to a high level of employment and an unemployment rate that appears to be at a cyclical low.

The combination of fewer home sales and a larger inventory of homes for sale has helped trend most markets to balanced conditions. As a result, home price growth has slowed considerably, and is expected to more closely reflect overall consumer price inflation through 2019. In addition, a record number of homes are under construction in BC, which will provide for much needed expansion of the housing stock and greater price stability.

Total Canadian employment was up by 11,200 jobs in October after jumping by 62,000 jobs in September. Part-time employment declined by 23,000 jobs while full-time work was up 34,000 jobs. The national unemployment rate ticked 0.1 points lower to 5.8 per cent. Total employment was up 1.1 per cent, or 206,000 jobs compared to this time last year.

In BC, employment fell by 1,100 jobs in October after adding 33,000 jobs in September.  On a year-over-year basis, employment was up 2 per cent and the provincial unemployment rate fell 0.1 points to 4.1 per cent, the lowest rate of unemployment in the province since December 2007.

Copyright British Columbia Real Estate Association. Reprinted with permission.