Canadian home building to plunge 30% by 2015, costing the economy 150,000 jobs, mortgage industry warns.
OTTAWA — Canada’s housing market is slowing dramatically in terms of both sales and construction, dragging down economic growth and putting some 150,000 jobs at risk in coming years, a mortgage industry association warns in its spring report.
A new report suggests nearly half of Canadian homeowners intend to buy a property in the next five years, despite a cooling off in the housing market.
The Canadian Association of Accredited Mortgage Professionals stops short of calling the ongoing slide that began about nine months ago a crash, but chief executive Jim Murphy says policy-makers should stop trying to tighten lending rules further and start thinking about helping for first-time purchasers.
“They’ve gone enough in terms of regulatory changes and we’re seeing a real slowdown in the overall housing market. The federal government wanted that to happen, but the question is how much … and what is that impact on the overall economy,” Murphy said Wednesday.
“Some people thought the market would come back(this spring). Well it hasn’t come back. It is a definite trend.”
Murphy notes that his organization never agreed with the perception that Canada had a housing bubble problem, but any concerns on that front have been dispelled following last summer’s action by Finance Minister Jim Flaherty and the bank regulator to tighten mortgage rules and loan underwriting practices.
Since then, home resale activity has fallen 8.3% and housing starts by 15%. They are likely to fall further, the report says.
CAAMP predicts that by mid-2015, national home construction will fall to about 150,000 units annually, or about 25-30% less than the 205,000 average for 2011-2012. That will result in about 150,000 fewer construction and indirect jobs, such as in the real estate sector and support industries.
In the Toronto area, the tumble will be even more dramatic, with starts dropping 50% to about 22,000, leading to a loss of about 35,000 jobs.