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Economic Overview
2017-2021 FINANCIAL PLAN
BRITISH COLUMBIA
BC’s GDP growth, forecasted at 1.7% for 2017, is expected to come in below the national
average for the first time in six years. A pullback in housing related activity and
possible trade sanctions in the forestry sector will hamper growth. The unemployment
rate is forecasted at 6.1% as a cooling housing market weighs on the construction and
real estate sectors. The weak Canadian dollar should provide a boost to manufacturing,
tourism and exports.
The Canadian Real Estate Association predicts that annual home sales volume will
decline by 12% with prices expected to fall by almost 8%. The Association cites
decreasing affordability, tightening mortgage rules and higher mortgage rates as
reasons for the anticipated slowdown.
In an attempt to address housing
affordability issues, the BC
government announced the BC
Home Owner Mortgage and
Equity Partnership (“BC HOME
Partnership”). The program will
assist BC residents who are
eligible first-time homebuyers by
providing repayable down
payment assistance loans. The
25 year loans will be interest and
payment free for the first five
years. Participants will be able to
borrow up to 5% of the home
purchase price, to a maximum of
$37,500. Critics of the initiative
are concerned that these loans
will fuel demand, re-stoking home
prices which are just beginning their
descent from historic highs. Price appreciation as a result of this program is likely to
affect the lower end of the market and counteract other measures already in place to rein
in prices.
The cost of living is going up with MSP premiums, insurance rates, and energy costs all
seeing increases. Double digits gains in property valuations were experienced for the
second year in a row. Single-family property assessments in Metro Vancouver have
gone up 30% to 50% while condo and townhouse units increased by 15% to 30%. In
response, the provincial government increased the threshold for Home Owner Grants,
making homes with an assessed value of $1.6 million or less eligible for the full grant
amount.
Source: Bank of Montreal Economics
+0.0%
+0.5%
+1.0%
+1.5%
+2.0%
+2.5%
+3.0%
+3.5%
2013
Actual
2014
Actual
2015
Actual
2016
Forecast
2017
Forecast
Gross Domestic Product 2013 - 2017
Canada
USA
BC
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