Housing sector continues to support flagging economy

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Sales volume and property prices in Canada’s real estate markets continued to grow for the first part of the year, serving to boost an otherwise weakening national economy.
 
Recent figures from Statistics Canada revealed that home sales and prices across the country gave the economy a much-needed shot in the arm, with real estate investment rising by 2.7 per cent in Q1 2016, as reported by Daniel Tencer of The Huffington Post Canada.
 
This increase, which represented the fifth consecutive quarterly growth in Canadian housing investment, was accompanied by a 2.2 per cent rise in real estate agent activity and a 0.1 per cent uptick in construction in March.
 
A low Canadian dollar also encouraged greater export volume, with a 1.7 per cent growth observed in the first quarter.
 
It’s not all good news, however, as these developments mean that the Canadian economy is now largely supported by exports and by the investment money flowing into the active housing sector. Any real estate downturn will spell big trouble, the CIBC warned.
 
“[It’s] a signpost of a slowdown ahead," CIBC economist Avery Shenfeld wrote in a client note on Tuesday (May 31).
 
The latest investment figures reflected the grim prognosis of a 0.7 per cent decline in the Canadian economy for Q2 as non-residential activity weakened for the fifth straight quarter, shrinking by 3.7 per cent in the first quarter of the year.

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