Balanced housing markets emerging
November 13, 2018
New houses in Oakville, Ontario. -- photo by Kelvin Chan
The year-long drama in Canada’s housing market that saw an unprecedented government attack on demand, has resulted in “moderation in both housing starts and sales” in most of the country for the next two years, according to the annual Housing Outlook from Canada Mortgage and Housing Corp. (CMHC).
But this drama has come with a cost. Total housing starts in 2019 are expected to fall below the 200,000 unit pace of the past few years before a mild recovery to 204,500 starts in 2020.
Home resales are forecast to be between 478,400 and 497,400 units annually while average prices should balance between $501,400 and $521,600 over the next two years.
Ontario will experience a partial recovery from the housing sales slide of this year in 2019, but it may prove short-lived. Buyers are expected to re-enter the market on the strength of stronger job growth and in-migration, but the downward trend in starts and sales is forecast to resume in 2020, CMHC contends.
Quebec housing starts and sales of existing homes will both be sustained, however. Slower economic growth and increased borrowing costs will moderate activity through 2020. Starts will continue to be dominated by the apartment market segment, while demand for resale single-detached homes will remain relatively strong.
British Columbia could see a 28 per cent decline in overall housing starts over the next two years, due to moderate economic and population growth. Resale housing prices are expected to see little or no growth through to 2020. Metro Vancouver, where resales are off 34 per cent this year compared to 2017, is being dragged down by a slew of new B.C. taxes and regulations, particularly on investors and foreign buyers. Over the next two years, its resale market will see lower sales, higher inventories and lower home prices, according to CMHC’s forecast.
In the Prairies, buyers’ market conditions in both Alberta and Saskatchewan should gradually shift to a balanced market with gradual improvement in economic and demographic fundamentals by 2020. Balanced market conditions in Manitoba are also expected to continue.
CMHC also reports that the Atlantic region will see sustained activity, notably in Nova Scotia, where existing home sales and average prices should trend higher while rental demand is expected to drive growth in apartment construction.