Plummeting oil prices shift the economic landscape, the Conference Board of Canada says.
Madhavi Acharya-Tom Yew – Toronto Star
Economists and consumers see brighter days ahead for Ontario, according to a forecast and opinion poll released separately on Monday.
Ontario, Manitoba, and British Columbia will lead growth in Canada this year as plummeting oil prices shift the economic landscape, the Conference Board of Canada said in its latest forecast.
These provinces will benefit from the lower Canadian dollar, a stronger U.S. economy, and stronger consumer confidence, Marie-Christine Bernard, associate director, provincial forecast, wrote in the Winter 2015 Outlook.
Comment: So a good economy is good for all of us. And it also means that real estate is not going to collapse… at least not this year.
Growth in Ontario’s economy is projected to come in at a healthy 2.9% this year, roaring ahead of the national average of 1.9% for the first time since 2002, according to the forecast by the Ottawa-based economic think-tank.
“Ontario, with its minor exposure to the oil and gas extraction sector, is expected to receive a significant economic boost in the short term,” Bernard said in a release.
Lower prices at the gasoline pump, which could add as much as $1,000 in disposable income to each Ontario household, will help boost consumer confidence, the Conference Board said.
At the same time, sinking oil prices have put the brakes on growth in Alberta, Newfoundland and Labrador, and Saskatchewan this year, the forecast said. Alberta’s GDP is expected to shrink by 1.5%.
Comment: Like I said, oil prices will have zero effect on Toronto real estate. It won’t even affect the Ontario economy. Which will rise more than the national average.
The U.S. economy, meanwhile, is expected to expand by 3.2% this year, which would benefit Ontario’s exporters, the Conference Board said.
However, the report warned, rising public debt and fiscal deficits will remain a challenge for most provinces this year.
The downturn in oil-producing provinces will be short-lived, the report said. Prices will rise gradually as the global oil glut eases and worldwide demand improves later this year and in 2016, according to the forecast.
Comment: Which yet again bodes well for real estate.
The index of consumer confidence calculated by Nanos Research also found that residents of Alberta, Saskatchewan, and Manitoba are quickly becoming the country’s most pessimistic.
Every week, Nanos Research conducts telephone interviews with 1,000 Canadians to ask their views on personal finances, job security, the outlook for the economy and where real estate prices are headed. The survey data is compiled for Bloomberg News.
The score for the prairies fell to 49.2 last week, putting it behind every other region for the first time since the series began in 2008.
The decline comes as prices for crude oil are trading at half of last year’s peak. As a result, house prices have fallen precipitously in Calgary and Regina.
The Bloomberg Nanos Canadian Confidence Index, a national composite score based on the four survey questions, declined to 53.8, the lowest level since May 2013.
About 20% of those surveyed expect real estate prices to fall. That’s the highest percentage since 2009, and almost double the level recorded in September.
Comment: Nationally. I bet they are all in Calgary!
The boost in sentiment from falling gasoline prices and lower interest rates is wearing off, the survey found. The share of Canadians who say their personal finances have improved fell to 21.2% last week, down from a record high of 25.3% three weeks ago, Bloomberg reported.
Comment: Again, most are likely in the oil patch.
Contact Laurin Jeffrey for more information – 416-388-1960
Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.