chpc.biz
  • Home
  • Chart Book
    • 6 Canadian Metros
    • Vancouver Housing
    • Calgary Housing
    • Toronto Housing
    • Compare Toronto & Vancouver
    • Housing Price Momentum
    • Real Price of Housing
    • Sales Listings
    • MAR-MOI
    • TSX Indexes
    • Millionaire Metric
    • Real Price of Gold & RE
    • Canadian Housing in USD
    • Bitcoin Gold & RE
    • Housing Starts
  • Plunge-O-Meter
    • Real Interest Rates
    • Real 10yr Rate
    • Interest Rate Spread
    • Yield Curve
    • Yield Calculator
  • Earnings Employment
    • Household Debt
    • Affordability
    • Demographia
    • Census
  • History Readings
  • Contact
    • Data Sources
    • Featured Links
    • Terms of Service

Slave to Housing

8/28/2013

 
Construction Share of GDPCLICK CHART TO ENLARGE
Canadian Subordination

This chart is from the August 2013 IMF study "The Driving Force behind the Boom and Bust in Construction in Europe" Prepared by Yan Sun, Pritha Mitra, and Alejandro Simone.

The Canadian population, in both public and private sectors, has been extremely dependent on housing as a percentage of GDP, well over 15% in 2011 compared to the U.S. and Germany at less than 5%.

The current Canadian fiscal policy is to balance the budget by 2015–16 which means somehow getting more revenue, spending less or both. As the IMF report observes:

As a control variable, government capital expenditure is significant, reflecting the large portion of government capital investment in infrastructure.
The March 2013 Budget does provide a large spending carrot of $53 billion over 10 years but that is not scheduled to start until 2015 which I presume is AFTER the budget is balanced. Meanwhile as we know CMHC has reversed its policy of "every one in the pool". 

Now the advice from governance is to get back to work, shed the excess debt and stop flipping real estate because as the IMF study notes: 
A rising construction share during the boom time means construction grows faster than GDP, and a sharp decline during the recession reverses the process. 
Canadian GDP (1.4% as of 1Q 2013) has been in a downtrend along with other developed countries for the last 50 years. So if the Canadian government is going to balance the budget in the next 2 years on declining GDP, then my guess is their plan for spending $53 billion is not going to start on schedule.

Here are some more quotes from the IMF study:
Most of the cyclical patterns in construction are similar to the business-cycle characteristics of investment in the macro-economic literature. For example, in a comprehensive study of 71 post-war US macro-economic time series, Stock and Watson (1999) found that investment in structure, especially residential structure is highly volatile and pro-cyclical. They also noted that employment in contract and construction is more than twice as volatile as the cyclical component of real GDP.
For advanced economies, the dependency ratio negatively affects the construction share. Dependency ratio affects construction through a few different and possibly competing channels. For example, a population with a high dependency ratio will have higher number of families. This will tend to increase demand for residential housing. On the other hand, high dependency ratio reduces household earning and thus housing affordability, depressing demand for housing. Our results suggest that overall, a higher dependency ratio may reduce housing affordability enough that demand for construction is reduced.
We're there folks: Canadian housing starts edge lower in July. Total Canadian urban housing starts fell 2.1% in July. Single-unit starts fell 5.5%. "Urban starts increased in British Columbia but fell in all other regions, including Atlantic Canada, the Prairies, Ontario and Quebec, CMHC said."


GO TO THE MOST RECENT BLOG POST

 

Follow @Brian_Ripley

Comments are closed.
    Follow @Brian_Ripley

    RSS Feed



    History, Charts & Curated Readings

    "History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'


    Archives

    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012

    Categories

    All
    AI
    Airbnb
    Apt
    Austerity
    Australia
    Balance Of Trade
    BNN
    BTC
    Bubbles
    Budget
    Bulls
    Busts
    Calgary
    Canada
    Capital Flight
    Case Shiller
    Case Study
    Charlie Rose
    China
    Chris Kimble
    Climate
    Cmhc
    Commodities
    CPI
    Credit
    Cullen Roche
    Currency
    Debt
    Deflation
    Demographics
    Dubai
    Employment
    Energy
    Environment
    Europe
    Exports
    Fair Value
    Flippers
    Future
    FX
    GDP
    Gold
    Greenspan
    Hong Kong
    Hyperinflation
    Id
    Imports
    Inflation
    Interest Rates
    Japan
    Labour
    Martin Armstrong
    MM
    Money Laundering
    Money Velocity
    Montreal
    Mortgage
    Net Worth
    New York
    OECD
    Oil
    Olympic Village
    Pandemic
    Pmi
    Poverty
    Productivity
    Recession
    REIT
    Rent Or Buy
    Russia
    Savers
    Savings
    Solar Cycle
    Stock Market
    Super Rich
    Tax
    Technology
    Tesla
    Toronto
    Trade
    Trump
    TV
    U.K.
    Unemployment
    U.S.
    Vancouver
    Victoria
    Wages
    War
    Weather
    Whale Watching
    WTO
    Yield

    "Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense​​
Home | Chart Book | Earnings | Plunge-O-Meter | History & Readings | Contact

BRIAN RIPLEY'S CANADIAN HOUSING PRICE CHARTS & Blog for
#Vancouver #Calgary #Edmonton #Toronto #Ottawa #Montreal
Real Estate Prices, Sales & Inventory with Plunge-O-Nomic Post Peak Price Action featuring the PLUNGE-O-METER
Data reporting changes by Real Estate Boards and other data collection notes are listed on the DATA SOURCES page.

If you want to be notified when I update this site, go to: twitter.com/Brian_Ripley and click "Follow".

GET A FREE TRIAL DISCOUNT TO CHRIS KIMBLE'S FINANCIAL MARKETS CHARTING SOLUTIONS
ADVERTISE YOUR REAL ESTATE FOR SALE TO THIS INFORMED AUDIENCE
Thousands of Unique Visitors and Page Views Every Month TRAFFIC CHART

Picture
Picture
Picture

Weebly - Websites, eCommerce & Marketing in one place.
Compare Weebly Plans
​This website & blog was built with Weebly; a very easy to use drag and drop cloud based app. TRY IT FOR FREE​
CHPC.biz (this site) is a SAFE BROWSING SITE according to Google's Safe Browsing Diagnostic

  • Home
  • Chart Book
    • 6 Canadian Metros
    • Vancouver Housing
    • Calgary Housing
    • Toronto Housing
    • Compare Toronto & Vancouver
    • Housing Price Momentum
    • Real Price of Housing
    • Sales Listings
    • MAR-MOI
    • TSX Indexes
    • Millionaire Metric
    • Real Price of Gold & RE
    • Canadian Housing in USD
    • Bitcoin Gold & RE
    • Housing Starts
  • Plunge-O-Meter
    • Real Interest Rates
    • Real 10yr Rate
    • Interest Rate Spread
    • Yield Curve
    • Yield Calculator
  • Earnings Employment
    • Household Debt
    • Affordability
    • Demographia
    • Census
  • History Readings
  • Contact
    • Data Sources
    • Featured Links
    • Terms of Service