Canada's Housing Bubble

Feb 01, 2010 Brian Morton Vancouver Sun

RBC’s Canadian Consumer Outlook Index finds that job anxiety in B.C. remained the highest in the country, rising three percentage points from December to 32 per cent, far higher the national average of 26 per cent.

Vancouver — Consumer confidence is on the rise in B.C. at the same time that debt concerns are higher than anywhere else in Canada, according to two separate surveys released Monday.

“Two out of three [65 per cent] British Columbians, along with residents of Atlantic Canada, are the most concerned about their current debt level, significantly higher than the national average of 58 per cent,” the January RBC Canadian Consumer Outlook Index concludes.

RBC chief economist and senior vice-president Craig Wright said much of the debt concern centres around higher real estate costs. “Historically, if you look at the housing market, it’s always highest [in B.C.] in terms of affordability.”

The survey also notes that B.C. residents have the grimmest assessment of the economy in the country (43 per cent characterized it as good, compared to 48 per cent nationally), something Wright found a bit surprising because RBC expects the 2010 Olympics to boost B.C.’s economy into recovery mode. “It may be that [B.C.] is looking backward instead of forward.

“We expect to see B.C.’s economy grow by a solid 3.3 per cent in 2010 before moving higher to 3.4 per cent in 2011.”

Meanwhile, the Conference Board of Canada’s Index of Consumer Confidence for January 2010 rose 13.8 percentage points in January to a 23-month high, with B.C. confidence rising more than 20 per cent.

“The index reached 109.1 in B.C., thanks to a 22.2 [percentage] point increase — the largest monthly gain ever recorded for the province,” the survey concludes.

Conference board spokesman Pedro Antunes said in an interview that the index suggests that Canadians are seeing light at the end of the recessionary tunnel and that “B.C. is certainly doing well in comparison to the national average. It’s above all other regions.”

Antunes also said that the economic outlook for B.C. is generally better than other provinces, adding that the 2010 Olympics will be very positive for the province. “Perhaps B.C. is sensing that.”

The RBC survey notes that job anxiety in B.C. remained the highest in the country, rising three percentage points from December to 32 per cent, far higher the national average of 26 per cent.

As well, four-in-10 (42 per cent) British Columbians believe the economy will improve over the next three months, compared to 37 per cent nationally. Long-term, 54 per cent in B.C. expect the national economy to improve over the next year, compared to 56 per cent nationally.

Only 13 per cent of British Columbians say that their personal financial situation is better than three months ago, compared to the national average (21 per cent). However, 31 per cent of B.C. residents expect their personal financial situation to improve over the next three months, slightly lower than the national average (32 per cent).

The RBC index is based on an online survey of 1,018 Canadians conducted by Ipsos Reid between Dec. 8 and 11.

The Conference Board survey was based on 3,000 telephone interviews conducted between Jan. 7 and 24.