Canadians aren’t ready to give up on real estate related economic growth. Statistics Canada released final Gross Domestic Product (GDP) numbers for 2017. The Canadian economy squeezed out a gain for the year. Nearly a fifth of those gains came from real estate related industries. Despite talk of a slowing real estate market, over a fifth of GDP still comes from real estate and related industries.
Real estate and related industries are commonly abbreviated as “FIRE.” The name comes from US’s bulking of Finance, Insurance, and Real Estate into a single category. Statistics Canada doesn’t combine them so we’re going to have to manually put that together, in between our butter churning. Canada’s FIRE industries would be Construction of Residential Structures, Real Estate and Rental and Leasing, and Finance and Insurance. CRSRERLFI isn’t all that snazzy, so we’re still going to say FIRE. Hope you don’t mind.
Over A Fifth Of The Canadian Economy Is Real Estate Related
Slowing real estate activity, FIRE is a huge percentage of Canada’s GDP. FIRE industries represented 22.68% of total GDP at the end of December 2017. This is down slightly from the 22.79% the year before, and down quite a bit from the May 2016 peak of 22.93%. For context, FIRE’s rapid rise in the US peaked at 21.5% in 2009. Canada is very dependent on real estate for the sake of the economy.
Canadian Real Estate Is Driving A Fifth Of All GDP Growth
Real estate played a huge roll in driving GDP growth over the past year. December’s numbers show a $55.96 billion increase from the year before. Breaking that number down, $10.73 billion of the increase was related to the FIRE segment. This means FIRE represented 19.18% of growth. StatsCan analysts noted the mortgage stress tests, but the ratio is actually lower than it has been recently. So we’re not seeing a large spike due to people squeezing in before stress testing became mandatory.