For those of you who read my blog regularly, you will know that I am always trying to make sense of the economic headlines and relate them to the Kelowna Real Estate market.
I have just been reading the TD Bank's latest quarterly Economic Report. They are predicting that the European Financial crisis, is going to continue to have an effect on the Global Economy and will in turn have an impact on our own economic growth.
Highlights of the TD report
• Canadian economic momentum over the second half of 2011 has been better than expected, led by a rebound in exports. Economic growth is projected to be 2.4% for the year as a whole.
• In 2012, an escalation of the European financial crisis and a deepening recession in the region will exert a significant drag on the global economy. Canada will be negatively impacted through weaker commodity prices, confidence and export growth. Labour markets will also soften as a result.
• Canadian economic activity is expected to improve in late 2012 and into 2013. Still, high household and government debt, rising interest rates and slowing housing activity will limit the speed of Canadian real GDP growth.
• Overall, since our last forecast in September, TD Economics has shaved 0.2 and 0.4 percentage points off its Canadian growth forecast for 2012 and 2013 respectively. We now expect real GDP growth of 1.7% in 2012 and 2.2% in 2013. The limited change to the 2012 annual growth reflects the momentum heading into next year.
To read the full report go to http://www.td.com/document/PDF/economics/qef/qefdec11_can.pdf
So how does that affect Kelowna Real Estate?
Slow economic growth in B.C. and low employment gains, particularly in full-time employment, in the Okanagan Valley, will impact consumer confidence.
As we have seen previously, this is bound to have effect in the numbers of people committing to make real estate purchases - particularly in the 'move up', recreational and investment area of the market.
As we have seen previously, this is bound to have effect in the numbers of people committing to make real estate purchases - particularly in the 'move up', recreational and investment area of the market.
Even though we are continuing to see low interest rates in the forecast, if consumers don't feel confident about their job security and incomes, they will be less likely to be spending.
I therefore continue to offer the view that house prices will remain flat during the first half of next year.
Economic forecasters are predicting things will improve towards the end of next year, and as they do, that is the time we should start to see modest home price rises in this area, providing we don't see a large influx of listings, which will keep us heavily in 'buyers market' territory.
As I said in my report at the beginning of this month, we have some really good things happening in the Valley - the Hospital expansion, growth in UBCO and Kelowna International Airport together with the retail expansion in West Kelowna. So despite all the doom and gloom, we do have reason for some optimism in this area.
With the World Economy being in such a fragile state, however, my predictions are written in sand, not in stone!!
Kind Regards
Trish Cenci
Tel 250 864 1707
