Government policy checks housing market overheating
Canada’s economy grew by about 3 percent in 2017, exceeding most forecasts and supporting growth in jobs and a fall in unemployment. But there is uncertainty surrounding the renegotiation of the North American Free Trade Agreement and possible higher interest rates.
The housing market dominates Canadian business headlines. In recent years, policy has shifted aggressively towards constraining rising house prices, with the major urban markets of Toronto and Vancouver attracting particular attention.
Housing starts and existing home sales are forecast to decline in 2018, dampened by the cumulative effects of policy changes and higher borrowing rates.
Construction costs and trade labour rates both rose by about 2 percent in 2017, slightly outpacing wider inflation in Canada of 1.5 percent.
Infrastructure and natural resources remain important within the national economy. There are major electricity projects (hydroelectric and nuclear) under construction, but the oil and gas markets are awaiting certainty about new pipeline construction.
|Market:||Staying the same|
|Cost escalation 2017–18:||3.0%|
|Cost escalation 2018–19:||2.5%|
|Location factor (USD):||98.4|
Canada’s economy is expected to cool slightly with growth in 2018 at about 2 percent, barring any sudden shock. But this rests on the outcome of the NAFTA negotiations. Eyes will also remain fixed on the housing market to check for cracks appearing.
This content is part of the International construction market survey 2018