Home starts to stay above 200,000 units in 2020 and 2021
October 30, 2019
Canadian consumers and home builders will apparently brush off the two-year downturn in the housing market and push new home starts over the 200,000-unit level in each of the next two years, according to a forecast from Canada Mortgage and Housing Corporation (CMHC).
Higher starts in 2020 and 2021 will reverse a two-year decline in starts that will see residential construction slip to the 194,000-unit range in 2019, the federal housing agency says.
CMHC notes a combination of higher job growth and record levels of immigration will propel the new home market. This year and next, total immigration is forecast to reach 318,000 people—a record pace—and the federal government hopes to ramp annual immigration to the 350,000-person range over the next decade.
Total national housing starts, at the high-end of the forecast, could reach 204,300 units next year and 206,300 new home starts by 2021.
In Ontario—which takes in more than a third of immigrants—housing starts are forecast to increase to maximum of 69,800 in 2020 and could spike to more than 74,000 in 2021, compared to a maximum of 64,700 starts this year. Condominiums and other multi-family projects will dominate construction, accounting for at least 65 per cent of new Ontario housing starts to 2021, according to the CMHC forecast.
Quebec, which has experienced robust housing construction since 2017, will see more moderate housing starts next year, however, with total starts declining slightly. The high-end of the CMHC outlook sees Quebec starts slipping from a maximum of 51,000 units in 2019 to 48,700 in 2020 and 47,500 in 2021. The reason, according to CMHC, is “slower economic growth and rising borrowing costs [that] will moderate activity through 2020.”
Canada’s other big new home market, British Columbia, will experience an uptick in housing starts, however. Total starts next year are expected to be in the range of 40,700 to 44,700 and could rise to nearly 46,000 in 2021, CMHC said, which would be an increase from the projected 42,000 starts in 2019.
CMHC is forecasting a slight increase in the five-year mortgage rate to the 5.5 to 5.6 per cent level over the next couple of years—slightly higher than the current rate of around 5.3 per cent.