CMHC expects Ottawa housing market to buck national trend in 2016 and 2017
Housing starts in Ottawa are expected to rise in 2016 despite a drop across the country, the Canada Mortgage and Housing Corporation said Monday.
In its Fall Housing Market Outlook, the CMHC said an increase in row home starts will contribute to total housing starts rising from 4,935 in 2015 to 5,120 in 2016.
“Steady housing demand is expected in Ottawa in 2016 as employment and earnings improve,” CMHC market analyst Anne-Marie Shaker said in a statement. “Low mortgage rates and modest price growth will continue to support demand this year and next, but stronger price growth and a rise in mortgage rates will pressure homeownership demand much more so in 2017."
The CMHC said while condominium starts will rise gradually in 2016 and 2017, they will remain below “recent peaks.”
Sales are expected to rise as well in 2016, the CMHC said, with balanced market conditions. Higher growth in sales compared to listings will push the average price to be in line with inflation.
The CMHC said it expects the vacancy rate to drop in 2016 and 2017 as better economic conditions will create increased rental demand.
The national housing market is expected to moderate over the next two years, the CMHC said.
A rise in the inventory of unsold homes, higher prices and mortgage rates and an increase in the supply of rental units are all expected to contribute the slowdown.
CMHC chief economist Bob Dugan says the gains in provinces like Ontario and B.C. have offset the slowdown in oil-producing provinces like Alberta.
"We expect, however, that this counterbalancing effect will decrease over time," Mr. Dugan said.
"As such, housing starts and MLS sales are projected to moderate in 2016 and 2017."
The Canadian housing market has been a key concern for economists as household debt has risen to record levels in relation to income.
Low interest rates have helped fuel sales and drive prices in many markets.
However, CMHC noted in its report that it expects interest rates to gradually rise from current levels starting late next year.
For 2015, CMHC said housing starts are expected to range between 162,000 and 212,000 units, with a "point" forecast of 186,900 units.
Housing starts are expected to slip in 2016 to a range of between 153,000 and 203,000 units, with a point forecast of 178,150 units, slowing to between 149,000 and 199,000 units, with a point forecast of 173,650 units, in 2017.
Sales through the MLS system are expected to range between 444,000 and 546,000 units this year with a point forecast of 494,700 units. In 2016, sales are forecast to range from 425,000 to 534,000 units with a point forecast of 479,500, and from 416,000 to 536,000 units in 2017 with a point forecast of 476,000.
The average MLS price is forecast to be between $417,000 and $459,000 this year with a point forecast of $437,700 before rising to between $420,000 and $466,000 in 2016. The average price in 2017 is expected to be in a range between $424,000 and $475,000.