Renovation investment has risen to historically high levels in Canada. This boom in renovation is another symptom of a broader housing bubble. The very high level of construction employment is another tell-tale sign. Falling house prices, however, could easily hit investment hard. The potential drop in renovation investment alone could amount to a full percentage point of GDP, or even more if investment were to fall below normal levels. In addition, job losses in the construction sector could halt the gradual recovery in Canada's labour market, pushing the unemployment rate up from an already high 7.6%.
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