Real GDP in Canada Increased 2.3% in Q4 2020 with Housing Investments Helping to Lead the Way

Statistic Canada (StatsCan) is reporting that real gross domestic product (GDP) grew 2.3% in Q4 of 2020, following record fluctuations in the previous two quarters. In 2020, real GDP shrank -5.4%, the steepest annual decline since quarterly data were first recorded in 1961. Final domestic demand rose 0.9% in Q4 2020, but overall it was down -4.5% for all of 2020. Growth in real GDP was strengthened by a large change in business inventories, as well as increases in government final consumption expenditure, business investment in machinery and equipment, and housing investment. In regard to housing, housing investment increases corresponded with low mortgage rates and rising demand for housing. Housing investment increased 4.3% in Q4, after rising 30.7% in Q3. The increases were broad-based: new construction grew 4.1%, renovations rose 4.8%, and ownership transfer costs were up 4.1%. The increase in ownership transfer costs was widespread, as home resale activity continued to rise across the country. Compared with 2019, housing investment was up 3.9% in 2020, while household residential mortgage debt expanded significantly over the same period.