City of Surrey 2017 - 2021 Financial Plan

Economic Overview

BRITISH COLUMBIA

BC’s GDP growth, forecasted at 1.7% for 2017, is expected to come in below the national average for the first time in six years. A pullback in housing related activity and possible trade sanctions in the forestry sector will hamper growth. The unemployment rate is forecasted at 6.1% as a cooling housing market weighs on the construction and real estate sectors. The weak Canadian dollar should provide a boost to manufacturing, tourism and exports. The Canadian Real Estate Association predicts that annual home sales volume will decline by 12% with prices expected to fall by almost 8%. The Association cites decreasing affordability, tightening mortgage rules and higher mortgage rates as reasons for the anticipated slowdown.

In an attempt to address housing affordability issues, the BC government announced the BC Home Owner Mortgage and Equity Partnership (“BC HOME Partnership”). The program will assist BC residents who are eligible first-time homebuyers by providing repayable down payment assistance loans. The 25 year loans will be interest and payment free for the first five years. Participants will be able to borrow up to 5% of the home purchase price, to a maximum of $37,500. Critics of the initiative are concerned that these loans will fuel demand, re-stoking home prices which are just beginning their

Gross Domestic Product 2013 - 2017

+3.5%

+3.0%

+2.5%

+2.0%

+1.5%

+1.0%

2017 Forecast Canada USA BC

+0.5%

+0.0%

2013 Actual

2014 Actual

2015 Actual

2016 Forecast

Source: Bank of Montreal Economics

descent from historic highs. Price appreciation as a result of this program is likely to affect the lower end of the market and counteract other measures already in place to rein in prices. The cost of living is going up with MSP premiums, insurance rates, and energy costs all seeing increases. Double digits gains in property valuations were experienced for the second year in a row. Single-family property assessments in Metro Vancouver have gone up 30% to 50% while condo and townhouse units increased by 15% to 30%. In response, the provincial government increased the threshold for Home Owner Grants, making homes with an assessed value of $1.6 million or less eligible for the full grant amount.

2017-2021 FINANCIAL PLAN

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