Canada's gross domestic product (GDP) remained virtually unchanged in the fourth quarter of the year despite another substantial decline in real estate transactions.
Real estate agent and brokerage activity fell 11.7% in Q4, according to new GDP data released by Statistics Canada on Tuesday, marking the latest in a string of quarterly declines since Q1 of last year when interest rates began their aggressive hiking cycle.
Looking at the year as a whole, real estate agent and broker activity was down 28.2% in 2022, the first annual decline in this sector since 2018. The news doesn't come as a total surprise, with home sales having fallen significantly across the country last year as would-be buyers struggled with affordability challenges and potential sellers held back, not wanting to list in an uncertain market.
Rental market activity, on the other hand, posted a 0.4% growth in 2022 as cities like Toronto and Vancouver continued to see increased levels of competition, pushing prices continually higher.
Overall housing investment, which also includes construction, renovations, and ownership transfer costs, declined 11.1% in 2022. Demand for residential mortgages weakened throughout the year as already-existing mortgage debt continued to grow, expanding by $138.8B.
As developers struggled with higher construction and labour costs, residential building construction trended downwards most of the year, ending 2022 with a 5.7% loss. It doesn't come as too much of a surprise then that wages in the construction sector led wage growth in Q4, jumping up 2.4%.
The construction sector overall ended 2022 up 1.2%, but this is notably a much smaller gain than the 5.4% seen in 2021. This gain was also largely driven by engineering and other construction activities, with the liquified natural gas project in British Columbia and wind farm projects in Alberta being large contributors. "Weaker activity in residential and non-residential building construction tempered growth in the overall sector," the StatsCan report notes.
Advance information indicates that Canada's GDP increased 0.3% in January, StatsCan says, with further decreases in the construction industry offset by increases in the mining, quarrying, and oil and gas extraction, wholesale trade, professional, scientific and technical services, and transportation and warehousing sectors.