Vancouver’s economy will continue to shine and outperform in 2008
John Clinkard
Despite signs of deteriorating growth in the United States, the Vancouver economy entered 2008 firing on just about all cylinders. Key to this recent economic strength is the sustained growth of commodities exports and manufactured-goods imports, all overlaid with a high level of ongoing investment related to the 2010 Olympics.
Over the past 12 months, the Vancouver census metropolitan area (CMA) has created 51,000 new jobs, its strongest 12-month increase since March 2006.
From an industrial perspective, as with the country as a whole, most of the new jobs (82%) have been in the service sector. In particular, job growth in transportation services (+15,000) has been particularly robust due to the expansion of the CMA’s cargo-handling capacity.
Other industries contributing to the recent strong pattern of employment growth include business services (+13,000), information services (+11,000), construction (+8,000) and education services (+5,000). This sustained growth of employment, along with steady net migration and positive demand from investors attracted by escalating prices, is likely to keep Vancouver’s housing market strong into 2009.
While housing affordability in Vancouver has improved, according to the most recent RBC economics report, high average prices (the highest in Canada) are likely to force many first-time buyers to purchase less expensive condos or to postpone purchasing until they can afford to buy.
As a result, housing starts will likely slow from 20,736 in 2007 to between 18,000 and 20,000 in 2008 and 2009. Major residential projects scheduled for 2008 include the Wall Center in False Creek, the Hotel Georgia Redevelopment and the East Fraser Lands Development.
Recent strong growth of office-based employment (+10.1% year over year) has pushed commercial vacancy rates down to their lowest level in more than six years and driven rents up by over 8% year over year, creating a positive climate for commercial construction. This positive environment should extend well into 2010.
