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.

Canadian FIRE

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.

Percent of Canada’s GDP From Real Estate and Related IndustriesPercentDec 1997Sep 1998Jun 1999Mar 2000Dec 2000Sep 2001Jun 2002Mar 2003Dec 2003Sep 2004Jun 2005Mar 2006Dec 2006Sep 2007Jun 2008Mar 2009Dec 2009Sep 2010Jun 2011Mar 2012Dec 2012Sep 2013Jun 2014Mar 2015Dec 2015Sep 2016Jun 201718.019.521.022.524.0Percent

Source: Statistics Canada. Better Dwelling.

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.

Percentage of Canada’s GDP Growth Driven By Real Estate and RelatedIndustriesPercentDec 1998Aug 1999Apr 2000Dec 2000Aug 2001Apr 2002Dec 2002Aug 2003Apr 2004Dec 2004Aug 2005Apr 2006Dec 2006Aug 2007Apr 2008Dec 2008Aug 2009Apr 2010Dec 2010Aug 2011Apr 2012Dec 2012Aug 2013Apr 2014Dec 2014Aug 2015Apr 2016Dec 2016Aug 2017-600-3000300600Percent

Source: Statistics Canada. Better Dwelling.

Despite the “slowing” market we’ve been hearing about, real estate continues to drive a huge percentage of the economy. Higher interest rates, and stress testing borrowers are anticipated to reduce demand. At nearly 20% of GDP growth, we’re going to have to see a big jump in other industries to continue to move the needle.