If Canada’s housing market takes a tumble, the labour market will take a significant hit, according to a new report.
Canada’s housing market is the “bedrock of the Canadian economy,” a new report by TD Bank said. It’s responsible for 20-305% of total economic activity in some years, and about 11% of total job growth, the Business News Network reported.
Currently, more than 900,000 Canadians are employed in home construction, renovation or repair, according to BNN. Altogether, they earn more than $50 billion in wages. And with other sectors of the economy struggling in the wake of plunging prices for oil and other commodities, some analysts fear that Canada is staking too much on the housing market.
“Residential housing is 7% of GDP, which is higher than it was in the U.S., and it’s been there for several years,” Hilliard MacBeth, author of ‘When the Bubble Bursts: Surviving the Canadian Real Estate Crash,’ told BNN.
“If you look at the overall numbers I say yes – we are too dependent on housing, and if something bad happens we will feel the pain and even the risk of a recession,” Benjamin Tal, deputy chief economist at CIBC CapitalMarkets, told BNN.
However, Tal said, the new government’s infrastructure spending plan may mitigate some of the risk. The new Liberal government has promised to spend billions updating the country’s aging infrastructure, BNN reported. That stimulus could help make up the slack for any slowdown in housing.
“For infrastructure you need the same kind of workers as in construction – so in a sense it will offset the negative,” Tal said.
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