Canada Mortgage and Housing Corporation (CMHC) released this week the Housing Market Outlook – Canada Edition for the Second Quarter of 2016.
The economic and housing report provides an outlook for the housing market reflecting the evolution of risks since the fourth quarter of 2015.
On an annual basis, housing starts are expected to range from 181,300 units to 192,300 units in 2016 and from 172,600 units to 183,000 units in 2017, a slight upward revision from our previous outlook, but a slowdown compared to 2015 when there were 195,535 starts.
There were 505,673 Multiple Listing Service® (MLS®) 2 sales recorded in 2015.
Sales are expected to range from 501,700 units to 525,400 units in 2016, but are expected to be in a lower range of 485,500 units to 508,400 units in 2017.
The average MLS® price is forecast to be between $474,200 and $495,800 in 2016 and between $479,300 and $501,100 in 2017.
These levels are higher than the 2015 average price of $442,999.
While they expect a slowdown in housing markets at the national level, there will be strong variation in housing-market activity among provinces.
Reflecting global economic trends, slower growth in oil-producing provinces (Alberta, Saskatchewan and Newfoundland and Labrador) will be partly offset by stronger GDP growth in British Columbia and Ontario.
Oil and natural gas prices remained low in the first quarter of 2016, and while consensus forecast is for oil prices to rise in the future, this is more likely to happen in 2017.
Consequently, housing starts in oil-producing regions are expected to continue declining in 2016 before rebounding in 2017.
When assembling the outlook, CMHC looked at global as well as Canadian-specific economic conditions.
While the global economic growth is expected to slow this year before rebounding in 2016, CMHC predicts Canada’s growth is expected to accelerate in 2016, led by manufacturing exports and increased public spending.
Employment is expected to increase to 7.2% this year before dropping to 7% in 2017.
Employment and net migration gains are expected to be the strongest in British Columbia and Ontario, where it is expected that new housing starts will grow further in 2016, partly offsetting the slowdown in oil-producing economies.
In summary, the annual decline in housing starts is expected to be less pronounced in 2017 than in 2016.