Housing, construction boom not enough, report suggests
Regional report by chartered professional accountants group says growth slowed last year and prospects for this year are uncertain
Kelowna’s economy might not be as stellar as it lets on.
For the past couple of years, the city has given off an air of affluence as housing prices have soared to new highs, the tech sector has taken off and construction seems to be happening everywhere.
But, the Chartered Professional Accountants of British Columbia paint a picture of jerky progress and doubts for the future in their newly released Thompson-Okanagan Regional Check Up.
“Economic growth slowed in 2016 and prospects for 2017 are uncertain,” said Karen Christiansen of the Chartered Professional Accountants, who is a partner at MNP in Kelowna.
“There were a few bright spots for our economy last year. Our population grew modestly by 3,766 residents. The increase was largely due to an influx of people from other provinces like Alberta and Lower Mainland residents cashing out on their properties and relocation to our region. This stimulated a surge in housing sales, new housing starts and construction employment.”
In the process, the average selling price of a single-family home is at a record $660,000.
That’s good news if you already own a home and can revel in the extra equity.
But, it also makes buying a house unaffordable for many.
Average rent for a one-bedroom apartment in the city breaking $1,000 a month for the first time also makes renting unaffordable for many.
While there may be jobs in construction and high tech, the Thompson-Okanagan region lost 11,500 jobs last year in the manufacturing, transportation and trucking, and trade sectors.
Over half of the cuts in manufacturing were associated with the downturn in wood product manufacturing, yet there was an increase in softwood lumber logging in 2016.
While retail sales in the region escalated 6.4 per cent last year, the sector did so while shedding some jobs.
Overall, 1,700 jobs were lost in the Thompson-Okanagan last year.
As a result, the local jobless rate hit 7.8 per cent, its highest since 2011 and significantly more than the six per cent provincial average.
Twenty-five reported business bankruptcies in 2016 indicate the region deteriorated as a place to work and invest, according to the checkup.
Another bleak point was the decrease in the value of major capital investment projects by 6.6 per cent to $22.4 billion, it’s lowest value in nine years.
“A continued low Canadian dollar relative to the American dollar should continue to benefit our region’s tourism industry,” said Christiansen.
“An expected, albeit slow, recovery in commodity prices and Alberta’s economy will also have a positive impact on our economy.”
One of the biggest clouds on the horizon could be the renegotiation of the North American Free Trade Agreement under U.S. President Donald Trump. A shift to U.S. protectionism would hurt Canadian exports.