- Red-hot housing market boosts GDP in westernmost province
- Energy rout pushes oil-producing neighbor into last place
British Columbia took over as Canada’s fastest growing economy last year on the back of its red-hot real estate market, while Alberta fell to last place.
Gross domestic product in the westernmost province grew 3 percent in 2015, the fastest since 2006, led by a 5 percent gain in real estate-related services. It marks the first time -- according to this particular series of data that goes back to 1997 -- the province has led nationally. Alberta’s GDP, meanwhile, fell by 4 percent on the energy rout.
The data highlight the growing importance of real estate to the country’s economy as a whole, with no province benefiting more than British Columbia where it represents almost 20 percent of GDP. Real estate has become the biggest industry for six of the country’s 10 provinces, the data show.
“Economic growth for the most part is being driven by the large metro areas, particularly Vancouver,” where there are job gains for service industries such as tourism, technology and film production, Helmut Pastrick, chief economist at Central 1 Credit Union, said by phone from Vancouver. “The housing market is robust, housing construction is also on the upswing as well.”
The changing fortunes of the two westernmost provinces will continue this year, with economists surveyed by Bloomberg predicting Alberta GDP will fall 0.9 percent compared with 2.6 percent growth in British Columbia. The growth report comes a week after British Columbia also recorded the lowest regional unemployment rate in Canada for the first time in records back to 1976.
“The prospects look good that we will maintain if not improve from these growth rates” in British Columbia through next year, Pastrick said.
Vancouver’s housing market -- Canada’s most expensive -- has seen prices rise 20 percent over the past year, recent data show.
First to Worst
Alberta’s contraction, on the other hand, may deepen with oil-sands production in the province hampered over the past week by wildfires that forced more than 80,000 people to flee their homes. The province led the country in growth in 2014.
The manufacturing-rich provinces of Ontario and Quebec posted expansions of 2.5 percent and 1.1 percent, respectively.
“You hear a lot about the rotation at the sector level, out of energy and capital investment into exports and manufacturing, the same thing is happening regionally, it’s maybe even more dramatic regionally,” said Robert Kavcic, a Bank of Montreal senior economist in Toronto. In a research note he also said “housing is roaring” in British Columbia.
The pressure on economies in different provinces isn’t about to let up. “You can almost copy and paste what we saw last year and stick it into 2016,” Kavcic said.