Housing starts will ease this year to 213,425 units after reaching 227,395 units in 2006, according to Canada Mortgage and Housing Corp.
Residential construction will continue to decline in 2008 to 200,175 units, marking seven consecutive years in which housing starts exceed 200,000 units.
“Although fundamental factors such as high employment levels, income gains and low mortgage rates remain supportive of strong demand, housing starts will resume a gradual downward trend in 2007. The level of new home construction will decrease in all provinces with the exception of Saskatchewan,” said Bob Dugan, Chief Economist at CMHC, in a news release. “The lower demand for homeownership will be mainly due to the rise in mortgage carrying costs and the erosion of the pent-up demand that built up during the 1990s.”
Existing home sales, as measured by the Multiple Listing Service, will register their best year on record with 487,500 units in 2007. The record activity in Alberta will be a key factor leading to the 0.9% increase in the national level of MLS sales compared to the previous year. A rising supply of listings will give home buyers more choice and help keep the level of MLS sales well above the 450,000 mark for the next two years. The level of MLS sales is expected to reach 466,490 units in 2008, its fourth highest level on record. Growth in the average MLS price will remain high at 9.6% in 2007 mainly because of continued strong price pressures in Western Canada. As most resale markets move toward more balanced conditions, growth in average MLS price is forecast to slow to 4.9% in 2008.
For the longer term, between 2009 and 2011, the annual number of housing starts will slow gradually to reach 188,300 units, a level that is more consistent with demographic fundamentals. Housing demand will continue to be supported by a positive economic picture and a healthy employment market which will attract a steady inflow of immigrants throughout this period.
At the provincial level, British Columbia home starts will remain above historical averages but will decline slightly. Housing starts will decline from 36,443 units in 2006 to 34,700 units in 2007, and ease to 32,300 units in 2008. The average MLS price in B.C. will grow by 8.7% and 4.2% in 2007 and 2008, respectively.
Despite a softer pace of economic growth, Alberta will remain among the top economic performers through 2008. Total housing starts are expected to ease from 48,962 units in 2006 to 47,000 units this year, making 2007 the third best year on record. In 2008 starts will decline to 44,500 units. Following an unprecedented 30.7% gain in 2006, the average MLS price is expected to climb another 26.1% in 2007 and 9.7% in 2008.
In Saskatchewan, steady economic growth, a healthy employment picture as well as improved net migration bode well for housing demand. Total housing starts are forecast to reach 3,850 units in 2007 compared to 3,715 units in 2006. Housing starts are expected to decline to 3,700 units in 2008.
In Manitoba, total housing starts are expected to edge lower from 5,028 units in 2006 to 5,000 units in 2007 and 4,900 units in 2008.
In Ontario, housing demand across the province will remain healthy despite moderate economic growth, higher new home prices, increased choice in the resale market, and land constraints. Housing starts will slide from 73,417 units in 2006 to 68,000 units in 2007 and to 63,875 units in 2008. These declines will move housing starts in line with the average level over the last 15 years. The average MLS price in Ontario will rise by 5.4% and 3.3% in 2007 and 2008, respectively.
In Quebec, modest economic growth and the absorption of the pent-up demand that built-up during the 1990s will cause housing starts to decrease from 47,877 units in 2006 to 43,775 units in 2007 and to slide to 40,250 units in 2008. The average MLS price growth in Quebec will moderate to 4.6% in 2007 and 2.9% in 2008.
In New Brunswick, housing starts are forecast to decline from 4,085 units in 2006 to 3,700 units and 3,600 units in 2007 and 2008, respectively.
In Nova Scotia, housing starts are forecast to ease from 4,896 units in 2006 to 4,650 units in 2007 and to 4,400 units in 2008.
@page_break@Housing starts in Prince Edward Island will decline from 738 units in 2006 to 625 units in 2007 and 600 units in 2008.
In Newfoundland, despite GDP growth of 5.0% in 2007 due to major oil production projects, tepid employment, ongoing population losses and higher mortgage carrying costs will cause housing starts to move lower from 2,234 units in 2006 to 2,125 units in 2007. Housing starts will continue to decline to 2,050 units in 2008.
Housing starts will slow down in 2007, 2008
New home construction will decrease in all provinces except Saskatchewan
- By: IE Staff
- May 15, 2007 May 15, 2007
- 07:25