CMHC expects housing starts and sales to slide over next 2 years

Lloyd Doyle
November 8, 2018

This is in part due to higher mortgage rates, slower growth within the population and economy, and changes to housing policies pushing MLS Sales down 21 per cent in the first half of 2018, compared to the same time a year ago.

Rising mortgage rates are also expected to affect housing demand and the resale market over the coming years. Average house prices are anticipated to range between $501,400 and $521,600 across the country. However, in suburban areas, like Peel, Durham and York Regions, there will be higher concentrations of single-family detached sales and listings, and that will slow price appreciation.

The national housing agency said housing starts and sales are both expected to decline in 2019 and 2020. The range is expected to rise in 2019 to between 52,700 and 57,300 and in 2020 to be between 53,600 and 58,400. The agency is forecasting the average Greater Victoria MLS home sale price to be between $693,900 and $703,300 this year (up from 2017's $652,928). CMHC forecast range is: $387,100 to $390,500 this year; $390,000 to $393,700 in 2019; and $394,000 to $398,600 in 2020. After peaking in 2016, sales dropped in 2017 and are still moderating. While economic growth has generated employment gains, full-time employment in Alberta is still recovering from the last oil price shock. As older units turn over, their rents will be increased to reflect the new price level. Over the forecast period, expected growth in full-time employment and rising net migration will contribute to the demand or housing.

"Through nine months of 2018, the average MLS price in Alberta was approximately $390,000, down 2.6 per cent from the same period in 2017". It said, "Rental market conditions across B.C. are anticipated to loosen as a result of slower growth in demand and a significant amount of new rental units set to enter the market". Vacancy rates are forecast at 7.7 per cent for 2018, before declining to 7.0 and 6.5 per cent in 2019 and 2020 respectively. But as builders continue to work on new high-rises vacancy rates might also rise.

Through this year, Vancouver has born witness to softening home prices across all market segments, and that trend is expected to continue, according to CMHC.

When the region's vacancy rate started to fall from 1.5 per cent in 2014, it pushed local governments to start new construction on rental housing.

Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald, including 12 years as a senior business writer.

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