Housing Makes Up 20% Of Canadian GDP – “This heavy reliance is not healthy. We basically borrowed our way out of this recession. Now, it’s payback time.”

“If the city is any indication of what’s going on in the country, it’s over-reliant on its housing sector.” – Herbert Crockett, a retired World Health Organization executive who lives in France says of Toronto.

“We basically borrowed our way out of this recession. Now, it’s payback time. We will be in for a period of long, slow growth.” – Benjamin Tal, deputy chief economist at the investment-banking unit of Canadian Imperial Bank of Commerce.

“It did seem a little unusual to have every policy maker in Ottawa hectoring Canadians about their excessive debt levels and yet the economic incentive for the average Canadian was completely slanted to taking on debt and not saving. The realist in me would admit it was the only tool the Bank of Canada had. The reality was, they really could not lift interest rates.” – Douglas Porter, chief economist at Bank of Montreal.

“As an economist working for a Canadian bank, I can’t go into a client meeting and have someone not ask me about housing in Canada. For U.S. investors, they are still a little gun-shy about what happened in the U.S., and I think they worry the same fate will happen to Canada.” – Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC, Royal Bank of Canada’s investment-banking unit, in New York.

Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S.
“This heavy reliance is not healthy,” CIBC’s Tal says. “I expect to see some softening.”

– excerpts from ‘Canada Losing Debt Halo as Bull Market Housing Peaks With Carney’, Bloomberg, 26 Feb 2013 [hat-tip Nemesis]

As we have been saying here for years.
What percentage of Vancouver’s GDP is linked to housing?
– vreaa

8 responses to “Housing Makes Up 20% Of Canadian GDP – “This heavy reliance is not healthy. We basically borrowed our way out of this recession. Now, it’s payback time.”

  1. Real Estate Tsunami

    I read somewhere, that about 30% of employment in the Lower Mainland is RE related.

  2. What percentage of Vancouver’s GDP is linked to housing? – vreaa

    The answer: Too much.

  3. UBCghettodweller

    What percentage of Vancouver’s GDP is linked to housing?

    Whatever percentage is not linked to tourism, IT, dockyards/shipping, and the drug trade.

  4. Also funny that the lower mainland (or, at least, the Vancouver Sun) has suddenly noticed – in conjunction with the dive in real estate – that BC’s resource industry is… actually important to the province.

    A bit of snark on a recent visit to the “hinterlands” by a Sun editor from an Interior newspaper editor:

    http://www.princegeorgecitizen.com/article/20130222/PRINCEGEORGE0302/302229962/-1/PRINCEGEORGE/blinded-by-the-sun

    Quote:
    ‘(Vancouver Sun editor Fazil) Mihlar even had the gall to suggest Northern B.C. residents should protest in front of the Vancouver Art Gallery like everyone else with a bone to pick.

    “We don’t have time to protest,” a member of the audience angrily texted Citizen publisher Colleen Sparrow, “BECAUSE WE’RE TOO BUSY WORKING!!!”‘

  5. US construction was not 4.3% of employment at the peak. That’s their currently depressed level, I think.

  6. Porter sounds like the anti-Carney
    where Carney was the Easy Money Cop, now we have Porter playing the Bad Money Cop.

  7. Canada’s commodity-heavy economy is getting slayed. Can’t be good for Housing. Bag Holders adding up in RE and Stock markets. Look out below.

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