Monday, March 30th18.2°C
25757
24285

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

25670


Recent Trending




Today's Market
S&P TSX14908.39+95.97
S&P CDNX680.33-1.10
DJIA17976.31+263.65
Nasdaq4947.44+56.22
S&P 5002086.24+25.22
CDN Dollar0.7887+0.0001
Gold1185.90+1.10
Oil48.61-0.07
Lumber279.60-3.00
Natural Gas2.62-0.05

 
Okanagan Companies
Pacific Safety0.115-0.010
Knighthawk0.010.00
QHR Technologies Inc1.50+0.00
Cantex0.03-0.01
Anavex Life Sciences0.215-0.004
Metalex Ventures0.04-0.01
Russel Metals24.40-0.10
Copper Mountain Mining1.18+0.05
Colorado Resources0.12-0.01
ReliaBrand Inc0.006-0.001
Sunrise Resources Ltd0.045+0.000
Mission Ready Services0.235-0.020
Decisive Dividend Corporation1.80+0.02

 





FEATURED Property
22333694353 Turner Road
4 bedrooms 2 baths
$499,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


Down payment

If you have less than 20% down payment, mortgage insurance is required through Canada Mortgage & Housing (CMHC), Genworth or Canada Guaranty. Homeowners no longer need the minimum 5% down payment ...


CRA Notice of Assessment

Many Canadians rush to file their taxes on time each year and don’t think about it until the next year. One of the most overlooked notices received from the CRA annually is the annual Notice of ...


Medical confidential?

If ICBC asks your doctor for your information you may wonder: Can ICBC ask my doctor for my medical information? Can ICBC request a medical report from my doctor without my consent? What is ICBC entit...

_








Member of BC Press Council


25534