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A Natural Slow Down This Year and Next
June 2011
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Anibal Valente, Vice President of
PCL Constructors Westcoast Inc. |
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By Hayley Mitchell
“Helmut Pastrick, Chief Economist for Central 1 Credit Union, the umbrella organization for the credit union system in the provinces of BC and Ontario, says that in 2010 the growth rate in British Columbia was 3.5 percent, largely thanks to the winter Olympics. In 2011, he predicts this number will naturally decrease to 2.5 percent, due to the slow down of the US economy, which will spill over into Canada as well. In regards to construction, first and foremost in the private sector, Pastrick says there is some decline as the building of hotels, offices, warehousing, etc slows down, which is simply a reflection of the weak market. In contrast, the public sector, as in schools and hospitals, as well as engineering projects like bridges and highways, are on the upswing due to fiscal stimulation efforts by the provincial and federal governments. Some of these are short term projects, but many are multi-year.
On the residential side, Pastrick says that at the start of the year “We’ve seen an increase in the residential construction in response to higher sales, higher housing prices, which began in 2009.” With the Federal Home Renovation Tax Credit the renovation sector was seeing a lot of business over the last year, but since its end on Feb. 1 2010, Pastrick predicts some decline in renovations.
As for new housing, Pastrick thinks that this sector will peak very soon and begin to decline later this year because of the HST costs on new homes above $525,000 and the new tightened mortgage rules. With the Bank of Canada set to raise interest rates this will also slow down the buyers and thus the construction of new homes, as the demand decreases in middle and late 2010. Beyond 2010 and 2011, Pastrick says “I do think we will see a revival in housing later on in 2011…another housing revival in sales, prices, and new construction. And looking down the road over the next three to five years, I would see more construction activity in residential and in private sector non-residential.”
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