canadian housing market Photo: Robb North/Flickr

Canada’s GDP is expected to grow by 2.4 per cent this year and 2.7 per cent in 2015 thanks in large part to Alberta’s booming economy.

In their latest Economics Provincial Outlook, the Royal Bank predicts Alberta’s real GDP growth for 2014 will replicate 2013’s rate of 3.7 per cent — the only province with a growth rate above the 2.4 per cent national average.

“Alberta is expected to carry much of the growth load for Canada this year, as other previously thriving provincial economies are expected to moderate slightly,” said RBC chief economist Craig Wright. “This shouldn’t be a problem as everywhere you look in Alberta’s economy there are signs of a boom.”

But we already know that Alberta is the star performer of the Canadian economy. We’ve heard about it a couple of times in recent weeks.

What’s new and worth noting in the report is the charge that the only area of the national economy likely to slow is the housing market.

RBC says both sales and construction activity are forecasted to “gear downward,” thanks in part to rising home prices which have damaged affordability in key markets.

For 2014, the bank predicts resale home sales will be only marginally higher than in 2013.

“Moderation in housing market activity sets up for this sector to provide limited support to the economy with conditions likely to soften further in 2015 as sales weaken, prices stabilize, and building activity eases again,” RBC said in its report, adding that the forecast assumes interest rates will rise and exert further pressure on affordability.

The bank also notes that housing starts are expected to decline over the next two years.

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