Will Canada’s real estate boom come to an end in 2016?
A new forecast from Canada Mortgage and Housing Corp. suggests massive price gains in real estate are coming to an end next year.
The Crown Corporation says its forecast is for the average sale price of existing homes to rise 7.2 per cent for this year to $437,700. CMHC provides a range for 2015 for average existing home prices of $417,000 and $459,000. By 2016, the range will be between $420,000 and $466,000 with the more precise forecast a 1.3 per cent gain to $443,300.
Price gains will be slow to come in 2017 as well with average prices expected to hover between $424,000 and $475,000 and the more exact figure $449,600 and another 1.4 per cent gain.
Sales are expected to reach 494,700 units in 2015 and then fall to 479,500 in 2016 and 476,000 the following year.
“In 2015, increased housing market activity in provinces like Ontario and British Columbia – provinces that have benefitted from declining energy prices, a lower Canadian dollar and continued low mortgage rates – offset slowdowns in oil-producing provinces like Alberta,” said Bob Dugan, CMHC’s chief economist, in a statement. “We expect, however, that this counterbalancing effect will decrease over time. As such, housing starts and (multiple listing service) sales are projected to moderate in 2016 and 2017.”
The Crown corporation says multi-unit projects, or condominiums, which typically have longer time horizons than single-detached units, will slow due to high levels of completed but unsold units which builders will try to use to feed demand.
For 2015, housing starts are forecast to reach 186,900 unit and then fall to 178,150 units. In 2017, starts will drop again to 173,650 units.
Source: Garry Marr, National Post