CMHC predicts that national housing starts will slow in 2016 and 2017
By Lucas on May 18, 2016
The Canada Mortgage and Housing Corporation (CMHC) released its second quarter Housing Market Outlook (HMO), announcing that they expect housing starts on a national level to slow in 2016 and 2017, and that MLS activity will reflect renewed economic growth this year and then fall back slightly in 2017.
The annual housing starts in Canada are expected to range between 181,300 units and 192,300, then decrease even more in 2017, ranging from 172,600 to 183,000. MLS Sales are expected to range from 501,700 to 525,400 transactions, and then drop slightly next year somewhere between 485,500 and 508,400.
The average MLS price forecast is expected to land somewhere between $474,200 and $495,800 by the end of this year, and then rise slightly to somewhere between $479,300 and $501,100 in 2017.
“Our forecast shows that there are important provincial variations within the Canadian housing market,” says Bob Dugan, Chief Economist, CMHC. “Increased housing starts in Ontario and B.C. will be more than offset by declines in provinces affected by the drop in oil prices in 2016. Sales will reflect renewed economic growth in 2016 before falling back slightly in 2017.”
For Ontario, the CMHC is predicting that housing activity in general will stay steady through 2016 and 2017. Housing starts are expected to range from 71,300 to 73,500 units this year, and from 63,200 to 66,500 in 2017.
Due to more affordable prices, existing homes will see stronger sales activity. By the end of 2016, sales in Ontario will range somewhere between 224,700 and 233,300 transactions. Then in 2017, the CMHC believes sales will slow slightly, ranging from 213,00 to 231,500.
“Despite an improving Ontario economy, housing activity is expected to ease over the forecast period as the cost of owning a home continues to increase,” explains Ted Tsiakopoulos, Regional Economist (Ontario), CMHC. “However, homes in southwestern and southern Ontario markets bordering the GTA tend to be more affordable, thus we expect a growing share of activity in those centres as we do for higher density housing which includes less expensive rental accommodation.”
Prices will increase at a slower rate over the next year and a half, which is probably a good thing for most prospective purchasers. This year, the average price for a home in Ontario will range from $505,500 to $516,100. In 2017, the average will rise to somewhere between $517,100 and $535,400.
