With the re-election of the Liberal Government, Canadians have at least some clarity on the future direction of housing policy. The Liberal Government proposed an increase to the first time home buyer program, of upwards of $780,000 in Vancouver, Victoria and Toronto. They also proposed a nationwide speculation tax on non-resident owners. Of course, it remains to be seen if they will actually follow through with these ideas.
What we do know for sure is that the Canadian housing market is enjoying a recent bounce in activity. Nationally home sales jumped 15% year-over-year in September, and it appears residential construction spending might be on the rebound as well.
After contracting for six consecutive months (November 2018- March 2019) investment in residential construction spending has been growing for four straight months. The most recent growth ticked in at 3.8% on an annual basis in August. This is encouraging news given how dependant the Canadian economy is on the Real Estate sector.
On a seasonally adjusted annual rate residential construction spending neared record highs of $127B.
Oddly enough, Vancouver residential construction spending remains in positive territory. In other words, the weakness in overall housing activity and the pull-back from property developers has not yet been felt. I suspect we will see construction spending fall into negative territory by early next year, ultimately becoming a drag on economic growth.
