Canadian Industrial Outlook: Residential Construction—Summer 2017

The Conference Board of Canada, 13 pages, August 22, 2017
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This report examines the short-and medium-term economic and profitability outlook for Canada’s residential construction industry.

Document Highlights

Interest Rates—The Bank of Canada increased its overnight rate by 0.25 percentage points in July and is expected to gradually raise it further. This will have an impact on mortgage rates and applicable rates on derived financial products. Rising rates and record-high indebtedness levels will contribute to a contraction in residential construction and renovation spending in 2018.

Renovation Spending—Home renovation has been a major growth segment for the residential construction industry in recent years, fuelled by households’ ability to tap into home equity lines of credit. But, high household indebtedness, a cooling housing market, rising interest rates, and tighter credit conditions will limit consumers’ willingness to take on large renovation projects.

Toronto Housing Market—The foreign buyers’ tax has lead to plummeting sales and booming listings. However, the impact of the tax in Vancouver is wearing off. Moreover, supply shortages amid strong demographics will continue to support housing demand in the area.

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