Canada housing starts will continue strong and stable
November 7, 2017
Canadian housing starts, which are projected to top 200,000 in 2017, will see similar performance over the next two years, according to the Housing Market Outlook report released on October 26.
“We project starts to decline in 2018 and 2019 compared to 2017 as there will be less stimulative economic conditions and gradually increasing mortgage rates,” Canada Mortgage and Housing Corp. (CMHC) states in the 12-page report.
CMHC provides a fairly wide range in its projections, forecasting between 192,200 to 203,000 units in 2018 and 192,300 to 203,800 in 2019.
Either scenario marks continued strong performance for more than five years.
The report notes that the inventory of new and unsold homes—primarily in the multi-family sector—continues to decline and, as of the second quarter of 2017, had hit the lowest level in six years.
The growth in population and near-record growth in immigration will continue to have a positive effect on housing starts, the report notes. As well, CMHC said employment growth should stay positive and provide support to new housing starts “but this effect should even out by the end of 2019.”
Greater Toronto is forecast to see a decline in detached housing starts, falling from 10,500 this year to a maximum of 5,900 in 2018, while 6,900 units is the highest projection for 2019. Multi-family starts, however, will increase from 30,900 this year to as many as 35,000 in 2018 and could reach as high as 36,300 a year after that.
Metro Vancouver is forecast to see detached housing starts dip slightly from around 4,800 units this year to 4,795 in 2018 and a maximum of 4,700 in 2019. Multi-family starts will drop from 20,575 in 2017 to the 16,330- to 18,730-range next year and a maximum of 16,860 in 2019, CMHC forecasts while noting total starts will remain above the ten-year average.
Sales of resale housing, as tracked through the multiple listing service (MLS) of real estate boards, are forecast at close to 500,000 this year, with only a modest decline in 2018, when between 456,600 and 504,400 homes will sell according to the report. In 2019, MLS sales are forecast to between 484,700 and 509,900. The average MLS home price is forecast to increase from 2017, which has a high range projected price of $539,700. This “outer range” increases to $535,000 next year and to $542,000 in 2019.
In Toronto, the average combined home resale price in 2018 is forecast at a range of from $765,000 to $805,000 in 2018, down slightly from this year.
Metro Vancouver will continue to experience Canada’s highest resale home price, which could reach $1.1 million in 2018, up from $1.05 million this year.