Both residential and commercial real estate activity in Alberta is set for further weakness as the provinces continues to face struggles on its gradual return to a stronger economy.
A quarterly outlook from provincial lender ATB Financial calls for commercial construction to remain flat in the next two years. Alberta saw this sector of construction falling faster than elsewhere in Canada during the second quarter of 2018.
Construction in the residential sector is also expected to cool. Builders have cut back in Edmonton and Calgary due to rising unsold inventory and higher mortgage costs despite lower prices.
Alberta’s economy is showing gradual improvement and ATB highlights employment, retail trade, and manufacturing sales are better than they were a year ago.
“There are still many people who are struggling, particularly those who are without work,” said ATB’s Chief Economist Todd Hirsch. “Employment has risen over the last year, but the rate of improvement has been slow and unsteady with the quality of new jobs somewhat in doubt.”
There are also concerns over global trade and that is making some companies adopt a wait-and-see approach.
“Not only is NAFTA in danger, but US trade relations with China, Mexico, the EU and Turkey have worsened significantly. At this time, there is little clarity as to how bad conditions will get. If trade tensions worsen, a global slowdown is almost inevitable,” said Hirsch.
With those challenges, ATB has cut its outlook by a tenth of a percentage point to 2.6% for 2018 and 2.2% in 2019.
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