Housing starts in Ottawa are expected to drop in 2016 despite improving employment conditions, the Canada Mortgage and Housing Corporation said Wednesday.
In its Spring Housing Outlook Report, the CMHC predicted between 4,600 and 4,800 starts this year, pulled down by a reduction in high-rise condominium starts. The CMHS is predicting between 4,300 and 4,900 starts for 2017.
The CMHC is projecting between 14,300 and 15,700 existing home sales this year and between 14,000 and 15,800 next year.
Balanced market conditions will lead to an average price of between $365,900 and $378,100 this year and $369,300 and $384,700 in 2017, it said.
“Historically low mortgage rates and improvements in employment and earnings will support housing demand in 2016,” CMHC senior market analyst Anne-Marie Shaker said in a statement. “Homeownership demand will moderate slightly in 2017 as mortgage rates begin to rise.”
The CMHC is also expecting home construction to be slower in most of the country in the next two years compared with 2015, though it says stark differences in outlook have emerged in various regions.
The agency said between 181,300 and 192,300 housing units will be started this year and the range for 2017 will be between 172,600 and 183,000 units.
Those ranges compare with 195,535 housing starts in 2015. However, the national numbers tell only part of the story.
“Our forecast shows that there are important provincial variations within the Canadian housing market,” CMHC chief economist Bob Dugan said in a statement.
“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.”
Citing data from the private-sector Multiple Listing Service, CMHC says it expects between 501,700 and 525,400 units of previously owned homes will be resold in 2016 and between 485,500 units and 508,400 units in 2017. Those compare with 505,673 resales last year, according to MLS figures.
The Crown corporation says the national average price will rise to as much as $495,800 this year and $501,000 next year. The averages don't adjust for high prices in the Lower Mainland region of British Columbia and parts of southern Ontario.
Since the previous estimates late last year, CMHC has raised its expectations for Ontario and B.C. housing starts and lowered them for Alberta, the heart of Canada's oil and gas industry.
The Alberta estimates for housing starts have been reduced since December to between 24,100 and 26,500 units this year and between 25,600 and 28,000 units in 2017.
In the previous estimate, the Alberta forecast for 2016 was 29,800 housing starts and the 2017 forecast was 30,300 units.
Ontario's housing starts are now estimated at between 71,300 and 73,500 for 2016, up from 70,156 last year. B.C.'s housing starts are now estimated at between 35,300 and 36,700 in 2016, up from 31,446 in 2015.
- with files from the Canadian Press