Posted on February 13, 2012
Canada Mortgage and Housing Corp. is predicting the Canadian housing market will remain fairly stable this year and next.
Keith Beaty
OTTAWA — Canada Mortgage and Housing Corp. is predicting the Canadian housing market will remain fairly stable this year and next, with little change from 2011 in prices, new home construction and sales of existing homes.
The national housing agency said Monday in its first-quarter 2012 report that the foreseen stability stems from an economy that appears set to expand at only a moderate pace over the next two years. The Bank of Canada's key overnight rate — which affects mortgages tied to prime rates — will likely remain low until mid-2013, which should also act to keep activity on an even keel.
“With the Canadian economy set to expand at a moderate pace and mortgage rates expected to remain low, activity levels in 2012 in both new home construction and sales of existing homes will stay close to levels seen in 2011,” CMHC deputy economist Mathieu Laberge said in a statement.
Low mortgage rates and high demand have driven housing prices sharply higher in large urban centres such as Toronto and Vancouver, leading many experts to warn that a housing bubble could burst when rates finally do rise.
Despite those warnings and alarms from top government officials that Canadians are taking on too much debt overall, the housing market has seen little change over the past few years, with price growth slowing but not retreating in most areas.
The CMHC says it expects the average house price in Canada to hit $368,900 for 2012, with a projected range between $330,000 and $410,000, according to data from the Canadian Real Estate Association's MLS service.
For 2013, that number rises to $379,000, with a range between $335,000 and $430,000.
“The moderate increases in the average MLS price are consistent with the balanced market conditions that occurred in 2011, and that are expected to continue in 2012 and 2013,” CMHC said.
Housing starts are expected to be around 190,000 units this year and 193,800 units in 2013, while existing home sales are expected at about 457,300 units in 2012 and moving a little higher to 468,200 units in 2013.