Oil’s slide troubling for Alberta government, industry, consumers

HOUSING

Canada Mortgage and Housing Corp. is busy revising its latest forecast which predicted Edmonton’s new, resale and rental markets would remain robust in the next two years — just not as robust as 2014.

“I think overall, there’s definitely more of a downside risk to our current housing forecast than there was a few months ago,� said Christina Butchart, CMHC senior market analyst for Edmonton.

She is careful not to make any new predictions yet, but said collateral damage from the oil-price crash could reach beyond the energy industry.

“When oil prices decline, there’s a trickle-down effect affecting a lot of the different sectors in Edmonton. “

Greg Steele, president of the Realtors Association of Edmonton, thinks crude will bounce back.

“Oil prices tend to be up and down in short spurts. If we have a long, protracted decline, we’ll definitely see it in the sales prices and the sales levels, but right now I don’t believe it’s going to have that much of a detrimental effect,� he said.

“People are still moving to Edmonton and they need a place to live, he said. “We might see slightly fewer sales, but with the amount of interprovincial migration into the Edmonton area and into Alberta, we’re basically not as heavily reliant on the oil sector as much as we used to be.�

He points to Edmonton’s busy construction industry.

“All of the projects that are under construction right now, those are three- to five-year projects and they’ve all been funded and paid for,� Steele said.

“The people working on those projects alone are going to buoy our economy and it’s not going to be felt too, too much in the Edmonton market.�

The ATB’s Hirsch says Edmonton’s real estate market is balanced, with no clear bubble to burst. “I’m not expecting a pronounced dip in prices,� he said.

PUBLIC SECTOR

Alberta’s public-service union is bracing for a freeze on ministries’ budgets, and possibly cuts.

“Here we go again on the roller-coaster ride of oil prices,� said Guy Smith, president of the Alberta Union of Provincial Employees. “A modern civil service cannot run on that basis.�

Smith made the comments after a grim warning from Premier Jim Prentice.

“I won’t cushion it,� Prentice said. “We will have to make some tough decisions and the impact will be felt in every corner of this province.�

Last week, Finance Minister Robin Campbell told the legislature there will be no increases to ministry budgets next year.

Smith said government ranks are already showing low morale and high turnover and citizens would also suffer from any cutbacks.

“These cuts would affect all Albertans, he said. Think of fewer people catching poachers, sheriffs catching speeders on the highway, land titles changes taking longer to approve, and for court clerks, “they’re stretched to the limit,� Smith said.

Alberta Federation of Labour president Gil McGowan said he hopes Prentice has learned from history. “Deep cuts to the public service don’t end the recession, they deepen them,� McGowan said.

INVESTMENTS

Plunging crude prices are dragging down the markets amid a sell-off of energy stocks. On the Toronto Stock Exchange, the energy sector, which makes up 23 per cent of the TSX, has slumped more than 25 per cent so far in 2014.

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