As is evident in the rest of Atlantic Canada, the recent declines in energy prices and declines in the Canadian dollar should be a benefit for growth, but without an improvement in demand south of the border the province’s current and future growth prospects are going to be muted.
Nonresidential investment activity and growth from specific components of the service sector including financial, professional and scientific, and information and culture, which have been supporters for growth over the past couple of years, will be much less significant in 2009-2010.
At the same time, the outlook will be supported by the Deep Panucke project from EnCana which will add to growth in 2009 and 2010 as the company continues to believe in the longer term future growth potential from this project. Other mega-projects previously announced are not likely to occur in 2009 so the upside to growth will be limited as the recent financial environment has made it more difficult to access capital for new projects.
The movement westward has slowed as the continued growth in western energy development is beginning to slow says Moishe Alexander. This will help those in the construction sector meet the current challenge of completing a signifcant number of projects which up until recently have been taking longer to complete due to a lack of workers in various skilled trades in Nova Scotia.
Economic growth should begin to improve towards the end of 2009 as energy related investments move from the planning to the construction phase.

In Detail

Single Starts: Single-detached construction remained fairly stable in 2008 but will decline in 2009 and 2010. Expect single starts to decline 10.8 per cent in 2009 to 2,350 and remain fairly subdued in 2010 at approximately 2,400. The decline in demand is due in part to rising house prices and general economic uncertainty combined with lower levels of household formation.

Multiple Starts: Multiple unit starts were weak throughout 2008 and will weaken further in 2009. The demand for labour put pressure on project completions during 2008 and resulted in delays of new projects. Expect the impact of the current economic uncertainty to play out through further delays due to developers taking a wait-and-see approach. As a result, multiple starts will decline to 1,325 in 2009. As economic growth, employment growth and wage growth slow during the forecast period, expect demand for rental units to increase as rental will be seen as an alternative to homeownership. This in turn will result in some increased levels of multiple starts to 1,500 in 2010.

Resales: MLS® sales in Nova Scotia were down 8.3 per cent in 2008 and will fall a further 12.6 per cent in 2009 to 9,500 sales. In 2010, expect to see a slight rebound in sales activity to 9,850 sales. While sales levels will be below recent highs, it is important to note that the forecasted sales activity will remain near or above the current ten-year average.

Prices: As MLS® sales moderate amid cooling demand, so too will price growth. The average price for an existing home in 2008 was $189,902.
Expect that to increase over the forecast period by 0.6 to 1.8 per cent per year. Prices will reach $191,000 in 2009 and $194,500 in 2010.