MONTREAL – New home construction is to drop 12 per cent in 2012, but resales and prices should continue rising in the Greater Montreal Area over the next two years, Canada Mortgage and Housing Corp. said Monday.
Waning demand for new homes and a more balanced resale market will lead to a six per cent drop in Greater Montreal housing starts to 18,800 units next year, even as the average price of a new home rises two per cent from $326,500 to $333,100 in 2013, CMHC said in a forecast.
“The decline will be felt mainly in the condominium segment, where rising inventories of unsold new (units) will force builders to slow the pace of construction in relation to the last two years,” said CMHC senior market analyst Bertrand Recher.
In Greater Montreal, new condo starts are expected to decline from a record-breaking 12,680 last year to just under 12,000 units in 2012. They should dip a further 10 per cent in 2013, with prices expected to rise a minimal zero to two per cent, Recher said, citing an unofficial forecast.
With the condo market shifting to balanced and even in favour of buyers in select parts of the city, Recher wouldn’t rule out a dip in condo prices, although he’s not expecting a major correction.
“In certain areas, we’re not excluding a small drop in prices,” he said.
Housing resales are to rise a lacklustre 0.8 per cent in 2012, following a softer second half of the year.