The government’s plans to axe 19,200 public-sector jobs over the next three years could send a chill through the hot Ottawa housing market, say brokers, if the dampening effects of past cutbacks are anything to go by.
“It will have an effect,”Chad Robinson, president of Verico Best Interest Mortgages Inc., told MortgageBrokerNews.ca, “but I don’t think it’s going to crash.”
That’s up for debate, with economists suggesting the job cull, announced Thursday as part of the federal budget, could result in as many 10,000 civil-servant layoffs in the Ottawa-Gatineau area by 2015.
That equates to about 7 per cent of the region’s federal public sector workforce. It also represents the brunt of those job cuts, floated as a way of streamlining back-office operations and helping shave $5 billion off the government’s expenses.
While some 7,200, or 37 per cent, of those job cuts should come from retiring bureaucrats, whether that’s at or before the age of 65, the uncertainty around who exactly will be among the thousands of others selected for layoffs is likely to slow consumer spending across the normally buoyant broker market.
“If the government does come out even with the threat of 5,000 or 10,000 layoffs,” Ottawa-Carleton broker Grant King told MortgageBrokerNews.ca last fall, “that means we’ll then have 60,000 civil servants doing nothing, buying nothing – not cars, furniture or homes.”
Robinson is optimistic that his industry will continue to benefit from one of the country’s most stable housing market.
“The job losses do cause some hesitation on the part of homebuyers, but to a small degree,” he said.
Brokers in Ottawa, and across the country, were much more positive about the government's decision to leave the current set of mortgage insurance rules unchanged with the budget. Bankers and, some economists, had urged it to tighten amortization and down payment requirements as a way of slowing down the growth in household debt levels.