Housing starts to moderate in 2008
VANCOUVER, Aug. 15 /MY MORTGAGE BC.COM/ - New home construction will begin to slow
in 2008, but will remain high by historical standards, according to Canada
Mortgage and Housing Corporation's (CMHC) third quarter Housing Market
Outlook, Canada Edition report.
Higher mortgage carrying costs will be a catalyst for the decrease in
residential construction to 215,475 units in 2008, from 228,343 in 2007. As a
result, seven of the 10 provinces will register a lower number of housing
starts in 2008 than in 2007.
"Strong economic fundamentals such as continuing high employment levels,
rising incomes and low mortgage rates will provide a solid foundation for
healthy housing markets this year," said Bob Dugan, Chief Economist for CMHC.
"Increased competition from the existing home market, coupled with the
elimination of the pent-up demand that built up during the 1990s, will exert
downward pressure on housing starts, which will decline to 194,000 units in
2009 from 215,000 in 2008."
Existing home sales, as measured by the Multiple Listing Service
(MLS(R))(1), are expected to fall by 11.9 per cent in 2008 to 458,300 units.
In 2009, the trend will continue with a decrease to 446,600 units (-2.6 per
cent). Despite a slowdown of MLS(R) sales, demand remains strong by historical
standards. For 2008 and 2009, MLS(R) price growth will remain above inflation.
Prices will reach 7,450 (+3.3 per cent) in 2008 and 7,000 (+3.0 per
cent) in 2009.
At the provincial level, despite British Columbia's growing population
and job numbers, a well-supplied resale home market will lower new
construction. Home starts will move back toward their long-term average by
2009. A tight labour market and robust income growth will partially offset the
dampening effect of rising mortgage carrying costs on the demand for new and
existing homes. As well, an increase in the number of existing homes for sale
will offer more choice to home shoppers and reduce new home demand. Housing
starts will decline to 35,800 units in 2008 and 31,500 in 2009 from
39,195 units in 2007. The average MLS(R) price in British Columbia will grow
by 7.6 per cent in 2008 and 3.3 per cent in 2009.
Alberta continues to experience very low unemployment and overall
prosperity. Despite these positive factors, the province is expected to face a
drop in net migrants between now and the end of 2008 due in part to the
increased house prices in Alberta and improved labour market conditions in
other provinces. These factors will combine to reduce housing starts to
32,750 in 2008 and 29,000 in 2009, from 48,336 units in 2007. Following
exceptional 30.7 per cent and 24.8 per cent gains in 2006 and 2007
respectively, growth in the average MLS(R) price is expected to slow to
1.1 per cent in 2008 and 2.8 per cent in 2009.
Since 2007, Saskatchewan has experienced a rebound in economic growth,
strong job creation and a surge in net migration. This continues to contribute
to strong housing demand within the province. Total housing starts reached
6,007 units in 2007, the highest level in 24 years. However, escalating costs
will stabilize housing starts at 6,700 units this year and 5,750 units in
2009. The average MLS(R) price in Saskatchewan rose by 32.0 per cent during
2007 and is expected to climb by 29.0 per cent in 2008 and 6.7 per cent in
2009.
Manitoba's solid economic performance and tight labour market conditions
have boosted net migration to levels not seen since 1982 and have contributed
to healthy levels of new home construction. Total housing starts reached
5,738 units in 2007, the best performance in 20 years. Starts will edge down
to 5,400 units in 2008 before rebounding to 5,550 in 2009. The average MLS(R)
price in Manitoba increased 12.6 per cent in 2007 and will continue to
increase by 14.1 per cent in 2008 and 7.8 per cent in 2009.
In Ontario, economic uncertainty, rising new housing prices and a greater
selection of homes available in the resale market will result in fewer new
home sales in 2008 and, by extension, a dip in new home starts in 2009.
Housing starts will move up to 76,025 units in 2008 from 68,123 units last
year due to pent-up demand; however starts will decrease to 65,000 units in
2009. The average MLS(R) price in Ontario rose by 7.6 per cent in 2007. For
2008 and 2009, the increases will be more modest at 2.8 per cent and 2.3 per
cent respectively.
Solid job creation and steady economic growth in Quebec during 2007
pushed housing starts up by 1.4 per cent to 48,553 units. A moderation in
employment growth will cause a slight shift downwards in 2008 to 46,600 units
and 45,750 in 2009. A reasonably healthy resale market will also fuel average
MLS(R) price growth in Quebec; prices will increase by 4.7 per cent in 2008
and 2.7 per cent in 2009.
In New Brunswick, rising mortgage carrying costs, a slower economy and
more choice in the resale market will result in lower levels of new home
construction. Housing starts are forecast to decline slightly to 4,200 units
in 2008 from 4,242 units in 2007. Moving into 2009, starts are expected to
fall to 3,875 units. The average MLS(R) price in New Brunswick rose by 7.7 per
cent during 2007. The price increases will be more modest at 4.7 per cent in
2008 and 2.1 per cent in 2009.
Nova Scotia is experiencing slower employment and population growth
during 2008, causing new home construction activity to be more restrained.
Housing starts are forecast to decrease to 4,475 units in 2008 and 4,200 in
2009 from 4,750 units in 2007. After rising 7.3 per cent in 2007, the average
MLS(R) price in Nova Scotia is expected to increase by 5.0 per cent in 2008
and 2.4 per cent in 2009.
Prince Edward Island's economy is expected to undergo modest economic
growth through 2008. As a result, housing starts will slowly decline to
700 units in 2008 and 650 in 2009 from 750 units in 2007. The average MLS(R)
price in Prince Edward Island will rise by 3.4 per cent in 2008 and 1.4 per
cent in 2009. Last year, the average price on the resale market increased by
6.4 per cent.
In Newfoundland and Labrador, a strong export-driven economy has pushed
housing demand up. Housing starts for 2007 were up 18.6 per cent to
2,649 units. For 2008 and 2009, starts will reach 2,825 units for both years.
The average MLS(R) price in Newfoundland and Labrador will rise by 14.9 per
cent in 2008 and 6.4 per cent in 2009.
As Canada's national housing agency, Canada Mortgage and Housing
Corporation (CMHC) draws on more than 60 years of experience to help Canadians
access a variety of quality, environmentally sustainable, and affordable homes
- homes that will continue to create vibrant and healthy communities and
cities across the country.
For more information, call 1-800-668-2642.
<<
National Housing Outlook
Key Housing Market Indicators
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2007 2008 2009
Actual Forecasts Forecasts
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Total housing starts (units) 228,343 215,475 194,100
Total single-detached houses 118,917 97,925 93,225
Total multiple housing units 109,426 117,550 100,875
Total MLS(R) sales(2) 520,192 458,300 446,600
Average MLS(R) selling price ($) 307,306 317,450 327,000
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Provincial Housing Outlook
Total Housing Starts
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2007 2008 2009
Actual Forecasts Forecasts
---------------------------------------
Newfoundland and Labrador 2,649 2,825 2,825
Prince Edward Island 750 700 650
Nova Scotia 4,750 4,475 4,200
New Brunswick 4,242 4,200 3,875
Quebec 48,553 46,600 45,750
Ontario 68,123 76,025 65,000
Manitoba 5,738 5,400 5,550
Saskatchewan 6,007 6,700 5,750
Alberta 48,336 32,750 29,000
British Columbia 39,195 35,800 31,500
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SOURCE: CMHC Housing Market Outlook, Canada Edition, Third Quarter 2008.
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(1) The term MLS(R) stands for Multiple Listing Service and is a
registered trademark of the Canadian Real Estate Association (CREA).
(2) The term MLS(R) stands for Multiple Listing Service and is a
registered trademark of the Canadian Real Estate Association (CREA).
Data are for 10 provinces
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