Canada's long housing cycle is turning and the impact of a softening market will be felt broadly, according to a Scotiabank report.
Residential investment stalled last year, as affordability constraints tempered home sales, and builders scaled back the number of new developments.
"Housing is a large and integral part of the Canadian economy and has been a major driver of growth over the past decade," said Adrienne Warren, Scotiabank's Senior Economist presenting at the annual Scotiabank Real Estate Market Outlook Conference in Toronto.
Highlights in the report include:
Employment growth in housing-related sectors has consistently outperformed national hiring trends over the past decade by a sizeable margin.
Housing assets have generated $1.7 trillion in net new wealth for Canadian households since 2000. This is a major change from the 1990s, when Canada's relatively weak housing market generated only $324 billion in household wealth creation.
Resale activity is expected to edge lower in 2014-2015. Rising mortgage rates, combined with high home prices and stricter mortgage regulations, will strain affordability, especially for first-time buyers in major urban centres.