2012 Economic Overview

Canada’s Economic Overview:

After the long recession and the ripple effects that impacted the economy since 2008, Canada’s economic growth in 2012 is not expected to come in below 2% in 8 of 10 provinces and less than 3% in nation leading Alberta and Saskatchewan, TD’s Economic Trends reports.[1] This is due in part to the high levels of risk still associated with Europe and the slow progress of the US’s recovery as well as a softening market in China.

Canada’s economic success can be attributed to a highly educated population, but as well a wealth of natural resources. The strength of its manufacturing and construction industries, health of the financial and service sectors and its dynamic trade relationship with other nations are also pertinent factors of the nation’s overall successful economic recovery.[2]

 Canada’s Housing Sector:

The already inflated housing sector is a key factor fueling the provincial economy. Sales of existing homes in the second quarter of 2012 were second best on record for the period with year to date resale increasing by more than 4%. Residential construction is booming in the province of Ontario and the number of homes under construction is peaking at its highest level since 1970.[3] RBC reports that housing starts during the first several months of 2012 were the strongest since 2006. [4]

Demand has been effectively exhausted after a decade long housing boom with Canadian ownership at record levels. Canada is expected to avoid the downturns seen in Europe and the US due to the fiscal restraint initiatives put in place by the provincial and federal governments. Household balance sheets in Canada remain in good standing with homeowner’s equity in real estate assets averaging 67% (compared with 41% in the US).[5] As the world got deeper into the recession, the federal and provincial governments introduced a variety of new housing market incentives which includes a renovation tax credit, improved first time home buyer assistance, expanded social housing investment as well as low cost loans to municipalities for housing related infrastructure. This, in combination with the Bank of Canada cutting its overnight rate to 0.25% continued to heat up an already strong housing market. The average price of a house in Canada in 2012 was estimated to be $368,000 and forecasted to be just over this price in 2013, at $377,300.[6]



[1] Marcil, Jacques (October 2012) Provincial Economic Update. TD Economics. Retrieved at <http://www.td.com/documents/PDF/economics/quef/prov.1012_update.pdf (1-10)

[2] CMHC Reports (Sept 2012) Canadian Housing Market: Starts Slow, Resale Stable in 2013. CMHC Housing Market Outlook. Retrieved at: htto:www.cmhc-schl.gc.ca/odpub/esub/61500161500_2012_Q04.pdf?fr=1352820937211 (1-32)

[3] Gampel, Aron, Warren, Adrienna and Webb, Mary. (August 2012). Special Report-Canadian Housing”. Scotia Bank Global Economic Research. Retrieved at <http//www.gbm.scotiabank.com/English/bns_econ/spaug8.pdf?> (1-5)

[4] Royal Bank of Canada. (September 2012).Provincial Outlook. RBC Economics Research. Retrieved from <http://www.rbc.com/economics/market/pdf/provfest.pdf

[5] Jestin, Warren. (2012) Not So Fast Forward. Scotia Bank Economic and Market Outlook. Retrieved from <http://www.gbm.scotia bank.com/English/bns_econ/EMOCRPT.pdf> (1-7)

[6] CMHC Reports (Sept 2012) Canadian Housing Market: Starts Slow, Resale Stable in 2013. CMHC Housing Market Outlook. Retrieved at: htto:www.cmhc-schl.gc.ca/odpub/esub/61500161500_2012_Q04.pdf?fr=1352820937211 (1-32)

Tom McEvoy

Tom McEvoy

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CENTURY 21 Lanthorn Real Estate Ltd., Brokerage*
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