CMHC predicts slower pace in 2007, 2008
Canada Mortgage and Housing Corp. says existing home sales as measured by the MLS will drop from 483,609 in 2006 to 464,550 units in 2007 and 449,200 units in 2008.
Similarly, after five years of strong growth in house prices, the rate of increase in the average MLS price will moderate to 5.9% in 2007 and 3.3% in 2008 as existing home markets move toward balanced conditions, says CMHC.
The strongest price growth will be in Western Canada; with the average price in Alberta growing by 13.3% in 2007, after having increased by 29.5% in 2006. Average prices in Ontario and Quebec will grow by 3.2% and 4.1% in 2007, respectively, forecasts the federal housing agency.
Housing starts will moderate this year to 209,500 units after reaching 227,395 units in 2006, says CMHC. Although residential construction will decline, 2007 will mark the sixth consecutive year in which housing starts exceed 200,000 units. Starts will ease further to 195,500 units in 2008, it says.
“Construction activity will continue to moderate as demand for home ownership moves toward more sustainable levels,” says Bob Dugan, chief economist at CMHC, in a news release.
“Most of the pent-up demand that built up during the 1990s has been absorbed, and higher mortgage carrying costs due to continued strong price growth and modest increases in mortgage rates will contribute to the slower pace of new home construction both this year and next.”
The average rental apartment vacancy rate in Canada’s 28 major centres decreased slightly by 0.1% to 2.6% in October 2006 compared to October 2005, says CMHC. The agency says that favourable employment conditions, high levels of immigration, and the increasing gap between the cost of renting and owning will continue to exert downward pressure on vacancy rates.
Nevertheless, many renter households will continue to be drawn into home ownership, it says. As a result, the vacancy rate will remain essentially unchanged, inching up to 2.7% in both 2007 and 2008.
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