CMHC forecasts 'moderation' in Canadian housing market over next two years

Resale market to see lower sales, higher inventories around Metro Vancouver: CMHC

Glut of unsold units to slow housing starts in Calgary through 2020, CMHC predicts

"Over the next two years, MLS sales in Alberta are expected to be relatively stable and only gradually rise", said the CMHC.

Rising mortgage rates and overvaluation is seen in the capital region and will likely mean a decline in sales because of affordability for new buyers.

The report said existing home sales will experience a fourth-straight yearly decline in 2018, with stabilization and some growth in 2019. The report said, "The primary driver of the increase will come from the introduction of new supply". CMHC said that it still sees global trade as a "risk" to Canada's economy and the housing market. Full-time employment has still not returned to the level reached back in 2015.

Over the past two years, sales growth for higher-end single-detached homes has boosted price growth. While home price growth slowed in 2018, prices still remain above inflation and are outpacing expected targets.

"In terms of new construction, the story is going to be more and more condos, and that seems to be where the push is both in terms of policy shift in government and higher house prices dictating demand towards high-rise construction because low-rise is out of reach for first-time buyers, and when the average price is over $1 million, it's not an easy entry point for any buyer". CMHC forecast range is: $387,100 to $390,500 this year; $390,000 to $393,700 in 2019; and $394,000 to $398,600 in 2020.

"MLS sales in Alberta are projected to be lower in 2018 compared to 2017". They are not expected to return to the 100,000 mark seen in 2016 and 2017.

The agency is forecasting the average B.C. MLS home sale price to be between $683K and $749K this year (2017 average sale price was $709,597). It is then expected to range from between $681,800 and $756,200 in 2019, and then hit somewhere between $675,400 and $758,600 in 2020.

The CMHC added in its report, "Housing starts activity in British Columbia should moderate as economic and population growth slows".

The agency also predicted the next two years for the rental market in the province.

Rental market conditions are also expected to loosen as a result of slower growth in demand coupled with the increased inventory that is going to enter the market.

The provincial vacancy rate which was 6.7 per cent in 2017 is expected to fall to 5.9 per cent this year, to 5.1 per cent in 2019 and to 4.9 per cent in 2020. The range is expected to rise in 2019 to between 52,700 and 57,300 and in 2020 to be between 53,600 and 58,400.

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