Keywords: housing

Growth prospects are weakening across the provincial landscape, with a number of regions at risk of recession around the turn of the year. With national growth now pegged at zero percent for 2023, negative prints are likely in British Columbia, Ontario and Quebec, with the real estate downturn playing a significant role. In British Columbia, residential investment carries the highest weight in real GDP in the country, at roughly 10%. While that weight is proportionally lower in Ontario, we expect the downturn in real estate there to be the sharpest in the country, a theme that is already playing out on the ground. While weakness has, to this point, flowed through resale activity and prices, slower new construction and renovation activity don’t look too far behind. Quebec faces a more modest slowdown in residential investment, but the broader impact of high oil prices and slowing U.S. demand will hit Central Canada relatively hard as well. The softer loonie is acting as a buffer for exports and manufacturing.

At the other end of the spectrum, some provinces could see resilience through the downturn. Alberta and Saskatchewan should face much less downside in residential investment, partly because those markets had already slumped for a number of years before the pandemic boom, and therefore never accumulated much froth. Oil prices, while well off their highs, continue to support local activity, incomes and government revenues. Growth will likely slow in the region, but remain in the low-1% range and outperform the national average. Atlantic Canada continues to draw in strong population flows, not only from outside the country, but also from other provinces. While we do see a meaningful slowdown there as well, growth prints should remain positive in 2023.