Residential Construction Slowdown, Despite Buoyant Housing Market
BMI View: We are maintaining our outlook for Canada's residential construction sector to continue to experience a gradual, but uneven, slowdown. As anticipated, the housing market has accelerated in the second half of 2013, with house prices and mortgage lending remaining buoyant. However, we do not expect this to prevent the continued slowdown in new residential construction, as developers remain focus on inventory reduction. Consequently, we have further downgraded our residential and non-residential growth rate for 2013 and 2014.
The residential building sector has been a positive contributor to overall construction sector growth in Canada; however, we anticipate this trend to dissipate in 2013. Leading indicators suggest that the residential construction market is struggling to reach previous highs, and therefore we expect the industry to contribute far less to the overall construction sector than over recent years. In line with equally unimpressive growth in the non-residential construction sector, we have further downgraded our outlook for residential and non-residential building net output to 0.7% in 2013, and expect growth to remain below trend in 2014 at 1.6%.
New Construction Slowing First
|Residential Unlikely To Contribute|
|Construction Industry Sub-Sectors, Real Growth, % y-o-y|