Saturday, December 20th-0.3°C
24562
23931

Housing correction would damage Canada's economy, says BMO report

OTTAWA - The Bank of Montreal says a sudden and sharp correction in the housing market could have a devastating impact on the Canadian economy overall, enough to trigger another recession.

The analysis by senior economist Sal Guatieri finds that even a 10 per cent correction — what many would call a soft landing — could sap as much as one percentage point from gross domestic product growth.

Guatieri says a 20 per cent or more plunge in prices and homebuilding could send the economy into recessionary territory.

The conclusion stems from an analysis of the contribution of the brisk housing market on the economy between 2002 and 2007, when prices rose five percentage points faster than incomes.

According to the BMO, the rapid escalation in home values and construction activity added 0.56 percentage points to annual growth during those six years.

But now, with home values at or near record levels, a sharp correction would have the opposite effect.

The BMO report does not suggest the housing market will crash, in fact it argues against it, but warns homeowners to manage their debts prudently.

The Canadian Press


Read more Business News

23617


Recent Trending




Today's Market
S&P TSX14468.26+121.51
S&P CDNX676.54+11.04
DJIA17804.8026.65
Nasdaq4765.38+16.983
S&P 5002070.65+9.42
CDN Dollar0.8618+0.0001
Gold1197.20+2.50
Oil56.50+2.39
Lumber336.20-0.70
Natural Gas3.446-0.196

 
Okanagan Companies
Pacific Safety0.12-0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.25-0.03
Cantex0.03-0.005
Anavex Life Sciences0.1726+0.0026
Metalex Ventures0.05-0.005
Russel Metals25.58-0.42
Copper Mountain Mining1.55-0.02
Colorado Resources0.120.00
ReliaBrand Inc0.011-0.0089
Sunrise Resources Ltd0.05-0.005
Mission Ready Services0.215-0.01

 
23744


23041

FEATURED Property
2154805646 Francis
10 bedrooms 6 baths
$780,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


My final thoughts on real estate

This will be the last column I write on real estate. Largely because at the end of the year I will be handing in my license. After 20+ years of working in land development, resort development and rea...


Reflecting on the end of the year

The importance of the end of the year and the Christmas holidays is profound. It is a time to reconnect with family and traditions that have made us who we are. But the year-end has always been a time...


Parenthood: Estates, insurance & taxes

It is now even more important to ensure your loved ones are well looked if anything should happen to you. Here are a few topics to consider helping you prepare for some of the unexpected events that c...

_








Member of BC Press Council


22842