Canada Mortgage and Housing Corporation Presents Housing Outlook 2015-2016

Canada Mortgage and Housing Corporation (CMHC)

Monday saw Canada's federal housing agency give a positive stance for housing starts this year and ensured that they would have a soft-landing at the national level.

Canada braved the worst of the global financial crisis and since that time, its housing market has accelerated, helped by low interest rates. Even lower oil prices have contributed to differences across the country's regional markets.

Experts from Canada Mortgage and Housing Corporation (CMHC) contend that, with the inventory of completed but unabsorbed homes above the historical average, the pace of new construction is expected to moderate over the next couple of years. This would mean less number of single-detached home starts in 2015 and beyond.

The CMHC's recent forecast has been lower than the corresponding forecast in February this year. It says that the housing starts will range between 166,540 and 188,580 units in 2015, with a point forecast, or most likely outcome, of
181,618. As per estimates made for 2016, a range of 162,840 to 190,830 starts, with a point forecast of 181,800, below the previous point forecast of 185,100, is expected.

The report equates the townhouses with the new single-detached homes in the Greater Toronto Area. It found that the pre-construction sales of townhouses showed an upward trend. A similar trend was observed in the sales and prices of resale townhouses across the area. However, it reported a decline in the construction of new, single-detached homes, a phenomenon that started in 2010. This was on account of rising land costs, lack of necessary infrastructure and rigid land use policies.

The CMHC upped its price forecast from February, for existing home sales, predicting a price range between C$402,139 and C$439,589 in 2015, with a point forecast of C$422,129. For 2016, point forecast was also raised slightly, to C$428,325 from the previous C$420,900.