Housing market rebound to boost Ontario, B.C. growth

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Growth rates in Ontario and British Columbia will be materially higher this year following “torrid” housing market rebounds in early 2023, but the boost will likely just delay a downturn, say Desjardins Group economists.

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“While these developments help the 2023 growth arithmetic, they don’t rule out a downturn altogether — they just delay it until 2024,” principal economists Marc Desormeaux and Hélène Bégin said in their provincial outlook report.

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The economists said home sales bounced back in most provinces following an initial pause in the Bank of Canada’s interest rate hiking cycle early this year. The robust gains in Ontario and B.C., however, were striking, as households in those two provinces are more stretched by affordability pressures and household debt levels.

“As we approach 2024, housing‑exposed provinces should see the more significant slowdowns we’ve long been expecting,” they said.

The largest housing markets in both Ontario and B.C. retreated in June after the central bank resumed raising interest rates. But the economists expect the dampening effect of higher borrowing costs to hit all regions in coming months.

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Amid the projected economic slowdown, Canada’s oil‑producing regions should fare the best, said Desormeaux and Bégin, as Alberta and Saskatchewan benefit from solid commodity prices and production gains.

Skyrocketing population growth and acute labour shortages have also supported economic expansion in all provinces so far this year,  which the economists describe as “the proverbial rising tide lifting all provincial growth boats.”

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