According to Canada Mortgage and Housing Corporation (CMHC)’s recently published 2018 Housing Market Outlook, housing markets in Canada should see a moderation in both housing starts and sales in 2019 and 2020, while home prices are expected to reach levels that are more in line with economic fundamentals such as income, job and population growth.
On a national basis, CMHC’s outlook for 2019 forecasts total housing starts to trend down, ranging between 193,700 and 204,500 with the decrease expected for both single and multi-unit starts. MLS sales are expected to range between 478,400 and 497,400 units annually, while MLS prices are predicted to range between $501,400 and $521,600.
In British Columbia, housing starts and MLS sales are expected to moderate as economic and population growth slows, while MLS Average Prices are predicted to see slower growth through 2020. In Metro Vancouver, the region’s resale market should see lower sales, higher inventories of homes for sale and lower home prices compared with recent market highs over the next two years. So far this year, demand and home prices moderated across all market segments and local regions.
The Prairies have seen buyers’ market conditions in both Alberta and Saskatchewan, but these are predicted to gradually shift to a balanced market with gradual improvement in economic and demographic fundamentals.
In Calgary, various factors will impact housing demand in 2019 and 2020. Calgary’s economy is expected to experience stronger population and employment growth, which will help support demand and lift home sales over the next two years. However, the average MLS price will continue to face downward pressure, but is expected to stabilize in 2019 and increase slightly in 2020. Meanwhile, balanced market conditions are expected to continue in Manitoba.
Ontario’s housing market saw slower activity in 2018. Existing home sales and starts are predicted to partially recover in 2019. Buyers are expected to re-enter the market following stronger than expected job growth and an increased number of people moving into the province before the downward trend in starts and sales resumes in 2020.
In Toronto, balanced conditions in the GTA have led to the prediction of moderate sales growth and home prices increasing in line with inflation over the coming years. The rising costs of home ownership will cause strong rental demand, while new supply will add some upward pressure on vacancy rates. Toronto home buyers should expect to see more housing choices as builders concentrate on new high-rise projects.
Housing starts and sales of existing homes are predicted to remain level in Quebec, however, slower economic growth and rising borrowing costs will slow activity through 2020, finds CMHC. Starts will continue to be dominated by the apartment market segment, while demand for resale single-detached homes is expected to remain relatively strong.
In 2018 and 2019, rental housing demand is predicted to increase slightly faster than supply in Montreal, which will put some downward pressure on the vacancy rate. Demand will be maintained by rising net migration over the coming years.
The Atlantic provinces are expected to see sustained activity, notably in Nova Scotia, where existing home sales and average prices should trend higher while rental demand drives growth in apartment construction.
“Our key takeaway from this year’s outlook is moderation in Canada’s housing markets for 2019 and 2020,” said Bob Dugan, CMHC’s chief economist, in a press release. “Housing starts are expected to decline from the higher levels we’ve seen recently. We expect resales in 2019 and 2020 to remain below recent peaks while prices should reach levels that are more in line with economic fundamentals such as income, job and population growth.”