British Columbia’s real estate, rental, and leasing sector make up a higher share of the province’s economy, compared to oil and gas in Alberta.
According to figures from Statistics Canada, the real estate, rental and leasing sector accounted for 18.36% of BC’s gross domestic product (GDP) in 2016. On the other hand, the mining, quarrying, oil and gas sector made up 16.98% of Alberta’s economy that same year.
University of Calgary economics associate professor Trevor Tombe pointed out the figures in a tweet last Thursday:
But in an interview with Jill Bennett on her CKNW show on Sunday, Tombe pointed out that this does not necessarily mean there’s an overdependence in B.C. on real estate or an overdependence on oil and gas in Alberta. “I think that’s somewhat a separate question, but real estate accounting for so much in B.C. does illustrate a growing trend that we’ve been seeing in that province.”
When asked if B.C. should be concerned with real estate’s increased share, Tombe said the rate should be more nuanced. “Most homeowners own the home, and they are not paying anyone for the housing service that they are enjoying. What statistics Canada needs to do is to try and put a value on the housing services we are enjoying… When house prices rise and when rents rise, we impute more value to the housing services.”
Tombe added that the amount of income the B.C. government generates from real estate transaction is “quite large” albeit not as large as Alberta’s from oil and gas. But the latter has also seen a “very rapid” drop from royalties in oil and gas, creating a large deficit, he added.
He warned the B.C. government not to expose its economy too risk by relying on income from housing market transactions. “Rather than trying to structurally change the economy itself, put in place policies that prepare for a
situation when incomes fall. And in BC’s case, it would be income from property.”
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