Residential Construction Spending Rebounds- Up 3.8% in August

Steve Saretsky -

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.

Residential Construction Spending
Residential construction spending in Canada

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.

Residential Investment in Vancouver
Residential investment in Vancouver housing.

Join the Monday Newsletter

Every Monday morning you'll receive a short and entertaining round-up of news on the Vancouver & Canadian Real Estate markets.

"*" indicates required fields

The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

Get the Saretsky Report to your email every month

The Saretsky Report. December 2022