Comprising a significant portion of Canadian economic activity in 2015, the housing sector has outstripped core industries such as agriculture, construction, and manufacturing as the main tent-pole propping up an economy long-battered by the oil shock and a weak currency.
Per data from Statistics Canada released on Monday (February 29), housing accounted for $7.4 billion of the increase in GDP last year, translating to around half of the country’s economic growth. GDP rose by 0.8 per cent in Q4, with the final annual GDP increase pegged at 1.2 per cent.
Imputed rent—that is, the cost of renting out an occupied property—was the main driver of transaction volume in the housing sector, University of Calgary economics professor Trevor Tombe said in an interview with The Huffington Post Canada
. Representing over half of real estate GDP, imputed rent in Canada last year was valued at over $4 billion.
While a boon for market players, this development has left some analysts troubled.
“This underscores the importance of real estate to Canadian growth, and also reinforces how key of a risk the real estate sector is for the Canadian economy,” TD Bank economist Brian DePratto said back in January.
“It is concerning to see that degree of concentration coming from one sector,” he added.
Housing price growth—especially in high-demand, high-volume metropolitan areas such as Toronto and Vancouver—has seen unabated growth in the past few years. This has raised concerns of possible market instability, brought about by lack of affordability for a significant fraction of domestic would-be buyers, in the near future.