Greater Victoria’s economy is heading towards a modest expansion of 0.7 per cent this year due to the continuing impact of higher interest rates and cooling national economic growth, says the Conference Board of Canada.
Inflation is still “gripping” cities across the country and Victoria is no exception, the board said.
The market for existing housing has “retreated sharply” and the average price has dropped, it says, adding that in Victoria’s new home market, backlogs of unsold units are rising.
Despite economic challenges, the board pointed to bright spots in employment, forecasting Victoria employment will rise 1.1 per cent — about 2,360 jobs — this year to nearly 219,000 positions — a record high.
It expects that health care, arts and entertainment, and the accommodation and food services sectors will all reach five-year-high employment this year, with a 19.2 per cent employment increase in accommodation and food services.
Next year is forecast to deliver job growth of 1.7 per cent (roughly 3,600 positions), and another 1.5 per cent (about 3,300 jobs) in 2025.
The board said that despite economic growth, it believes the region’s unemployment rate will rise slightly to 3.9 per cent this year and stay in that range for the following two years.
It predicts gains in retail sales of 1.4 per cent this year, followed by up to 5.1 per cent gains in 2024 and 3.8 per cent in 2025 due to economic growth.
Migration will help population growth, with Greater Victoria expected to reach 446,700 residents by 2025. It’s currently at 423,000.
About 8,520 newcomers are expected this year and the following two years in Greater Victoria.
Expanded immigration to meet federal targets drew just under 5,000 international newcomers to Victoria in 2022. The 20-year average has been about 1,200 people a year, the board said.
Net international migration will decline but remain higher than in the past because of federal goals. Close to 2,800 international migrants are expected annually in Victoria between 2023 and 2025.
Inter-provincial migration is anticipated to account for an average of 3,865 people moving to Victoria each year from 2023 to 2025. And inter-city migration will see about 1,860 people per year move to the region for those same years.
Construction and real estate — high-value sectors for the economy — are experiencing challenges here as elsewhere, the board said.
“In step with national trends, local demand for existing homes continues to weaken as rising interest rates decimate housing affordability.”
Greater Victoria’s resale market is a buyer’s market, the board said.
“The new home market is also struggling. In January, unsold new unit inventories inventories rose to their highest level since late 2021 and were more than two-thirds higher than in January 2022.”
The board said it expects Victoria’s construction sector to “take a breather after nine years of uninterrupted growth that saw the industry expand by 81 per cent.”
It said it expects the sector will shrink by three per cent this year and 0.2 per cent next year, but expand by 1.5 per cent in 2025.
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