File photo.
A “policy-induced” downturn in the housing market is being blamed for slowing the provincial economy over the next three years, according to a report Thursday from Central 1 Credit Union.
The report predicts 2.1 per cent growth in 2019 and 2.4 per cent next year.
It says economic growth in B.C. decelerated in 2018 at 2.8 per cent after a robust climb of 3.8 per cent in 2017.
Central 1 says dropping house sales and prices will trigger a sharp decline in housing starts this year, resulting in few residential construction jobs, spending and activity.
The report is forecasting “the most pronounced drop in broader residential investment since 2009.”
Central 1 chief economist Brian Yu said in the report much of the downturn in the housing market is courtesy government changes, such as introducing stress tests for mortgages at the start of 2018 and the implementation of the speculation tax.
Courtesy Central 1 Credit Union.
Aside from housing, though, Central 1 says B.C.’s economic condition remains firm with rising employment and a low jobless rate, which dropped two points in February to 4.5 per cent, the lowest reading across the country.
The impacts of the housing downturn will be cushioned largely through increased capital investment with major public works projects across the province, the report says.
Provincial GDP growth is expected to accelerate to 2.8 per cent in 2021.
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