Canada Mortgage and Housing Corp. issued a dim forecast for the housing market for the next two years on Monday, predicting dismal price growth — but at least one economist thinks the Crown corporation’s numbers may be off in Canada’s most significant market.
CMHC, which advises the federal government on housing policy, isn’t predicting a massive correction for housing, but it did say that consumers can expect prices to barely keep pace with inflation through 2017 and that sales and new construction would slow down.
“In 2015, increased housing market activity in provinces like Ontario and British Columbia – provinces that have benefitted from declining energy prices, a lower Canadian dollar and continued low mortgage rates – offset slowdowns in oil-producing provinces like Alberta,” said Bob Dugan, chief economist with CMHC. “We expect, however, that this counterbalancing effect will decrease over time.”
The Crown corporation says the average price of an existing home will climb to $437,700, a 7.2 per cent increase from a year earlier. But in 2016, the annual increase will be down to 1.3 per cent and only another 1.4 per cent will be added in 2017.