BCBusiness

MAY 2019 BCBUSINESS 13 G O F I G U R E Average monthly household spending for 2016 on landlines and mobile phones, respectively A lthough B.C. has argu- ably been the biggest beneˆciary of the most recent housing boom, a tidal wave of cheap money has ›ooded across the nation and into the hands of real estate developers desperately trying to keep up with a home-buying frenzy. Thanks to their eœorts, housing starts hit record highs, and so did bank loans. Canadian real estate devel- opers are borrowing more than ever, the Bank of Canada reports. Their outstanding loans reached $16.68 billion in the fourth quarter of 2018, up 2.36 percent from the previ- ous one. This represents a 20.28-percent jump compared to the fourth quarter of 2017. Meanwhile, following a raft of government measures aimed at reining in runaway household debt and property prices, demand for new homes has hit the skids. Still, a record number of residences remain under construction, with their builders all aiming to cross the ˆnish line so they can pay oœ loans. Property developers in B.C. face increasingly tough condi- tions as provincial taxes, along with the retreat of Chinese capital ›ows, have put even more downward pressure on the housing sector. The latter is of particular con- cern, given recent Canada Mortgage and Housing Corp. ˆgures suggesting that non-resident buyers make up a much larger segment of the new construc- tion market than previous estimates showed. In Vancouver, 19.2 percent of condominiums built from 2016 to 2017 had at least one non-resident on title, the CMHC notes. The proportion is even higher in other B.C. cities. For condos built in Coquitlam dur- ing that period, 20.8 percent fell into the same category, according to urban planner Andy Yan in the Globe and Mail. In Surrey, the total is 20.5 percent; it's 25.1 percent in Burnaby, and a whopping 25.8 percent in Richmond. With non-resident pur- chasers pulling back, it should be no surprise to see many developers oœering increased buyer bonuses and incentives on recently launched projects. The slowdown in the new property segment must be keeping developers and bank- ers up at night, but further dete- rioration could have a much broader economic impact. As of 2018, 9.5 percent of the B.C. labour force worked in con- struction, according to Statistics Canada, and real estate and construction services make up more than 25 percent of provin- cial GDP. Also, last December, new home sales accounted for 11.5 percent of all transactions at the Land Title and Survey Authority of British Columbia. Whether you're a banker, a builder or someone in a diœerent line of work, the development space remains as crucial as ever to the provincial economy. Borrowed Time Real estate developers face a combination of mounting debt and sagging demand for new homes. The broader B.C. economy could feel the pinch, too by Steve Saretsky P R OP E R T Y WAT C H $66.38 Average monthly service revenue per B.C. mobile subscriber, 2017 9% Share of British Columbians in a 2016 Angus Reid survey who thought they were getting a good deal on their cellphone service T E L E C O M M U N I C AT I O N S A S S O C I AT I O N, A N G U S R E I D I N S T I T U T E , T E L U S, H U AW E I, S P E E D T E S T URBAN B.C. RURAL B.C. $96.17 $22 $34 $88.92 $2,594 Average total spending per B.C. household for 2017 on all communications services A 8% higher than the Canadian average A 28% increase since 2013 57.99 Telus's mean cross-Canada 4G down- load speed, in megabytes per second, during a 2018 study that found it to be the country's fastest 2+ Download speed, in gigabytes per second, during Telus's first urban 5G trial in Vancouver last year, using Huawei technology 2 Suppliers worldwide that could provide the necessary technology if Huawei is banned 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Debt Buildup Outstanding loans to real estate developers at Canadian chartered banks ($ millions) $18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 S O U R C E S : B E T T E R D W E L L I N G, B A N K O F C A N A D A

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