According to the fourth-quarter Housing Market Outlook, Canada Edition from Canada Mortgage Housing Corporation (CMHC), housing markets are expected to moderate in 2016 and 2017.
“In 2015, increased housing market activity in provinces like Ontario and British Columbia – provinces that have benefitted from declining energy prices, a lower Canadian dollar and continued low mortgage rates – offset slowdowns in oil-producing provinces like Alberta,” said Bob Dugan, CMHC chief economist, in a press release. “We expect, however, that this counterbalancing effect will decrease over time. As such, housing starts and MLS sales are projected to moderate in 2016 and 2017.”
Inventory management of multi-unit projects is a large factor in the moderation of starts due to the longer period of construction over single-detached units. CMHC believes new home construction will decline in coming years with the large number of completed but unsold units, leading some builders to direct the demand towards existing inventory.
House price growth is forecast to decline, as moderately-priced homes are expected to account for a large number of sales through the MLS system.
According to CMHC’s forecasted ranges for resale and new home markets, in 2015, housing starts are expected to sit between 162,000 and 212,000 units, with a point forecast of 186,900 units. For 2016, housing starts are expected to range between 153,000 and 203,000 units, with a point forecast of 178,150 units. In 2017, the expected range of housing starts falls between 149,000 and 199,000 units, with a point forecast of 173,650.
Sales through the MLS system are expected to range from 444,000 and 546,000 units in 2015, with a point forecast of 494,700 units. In 2016, MLS sales are forecast to range between 425,000 and 534,000 units, with a point forecast of 479,500. For 2017, MLS sales are expected to range between 416,000 and 536,000 units, with a point forecast of 476,000 units.
The average MLS price is expected to range between $417,000 and $459,000 in 2015, with a point forecast of $437,700. The average price in 2016 is expected to be between $420,000 and $465,000 and between $424,000 and $475,000 in 2017, with respective point forecasts of $443,300 and $449,600. The point forecasts expect gains of 7.2 per cent in 2015, 1.3 per cent in 2016, and 1.4 per cent in 2017.