Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

October 26, 2015 08:15 ET

Calgary Housing Starts to Decline in 2015 and 2016 But Rise Slightly in 2017

CALGARY, ALBERTA--(Marketwired - Oct. 26, 2015) - According to Canada Mortgage and Housing Corporation's (CMHC) Fall 2015 Calgary Housing Market Outlook released today, total housing starts in the Calgary Census Metropolitan Area (CMA) are forecast to decline to 11,900 units in 2015 and 10,000 in 2016 before increasing slightly to 10,200 in 2017.

"The impact of lower oil prices on Calgary's labour market and consumer confidence, combined with a well-supplied resale market will reduce new home construction in 2015 and 2016," said Richard Cho, CMHC's Principal, Market Analysis for Calgary. "In 2017, total housing starts are forecast to increase slightly with support provided by gradual improvements in job creation, income growth and net migration," he added.

New construction of single-detached homes in 2015 and 2016 is forecast to reach its lowest level since 1988 with 4,000 starts per year. "Employment growth in 2015 has slowed and will also be muted in 2016 as job losses are expected in the early months of the year. Migration will also decline as the region continues to face an elevated unemployment rate," said Cho. Economic conditions are anticipated to improve in the second half of 2016 and into 2017. Single-detached starts are forecast to rise three per cent to 4,100 in 2017.

Following a record high of 10,637 units in 2014, multi-family starts are forecast to decline to 7,900 units in 2015 and 6,000 units in 2016. An increase in inventories, a rise in rental vacancy rates and competition from the resale market will moderate multi-family starts. In 2017, multi-family construction is forecast to increase to 6,100 units as economic conditions improve.

MLS® residential sales in Calgary are forecast to decline 28 per cent to 24,300 in 2015, after reaching a record high of 33,615 units in 2014. A sharp rebound in sales is not expected for 2016 as employment growth will be particularly weak in the first few months before posting some gains later in the year. Confidence in the economy and housing markets will gradually improve through to 2017 as economic activity gains ground and employment increases. Although mortgage rates are expected to rise, they will still remain historically low, and the anticipation of higher rates may also move some buyers off the fence. Sales are forecast to rise 1.6 per cent to 24,700 units in 2016 and increase two per cent to 25,200 units in 2017.

Following five consecutive years of increases, the average MLS® residential price in 2015 is forecast to decline 2.1 per cent to $451,000. Part of the decline in the average price will be due to less activity in the move-up and luxury home segments of the market. In addition, prices pressures have softened from the previous year due to an increase in supply and a moderation in demand. In 2016 and into 2017, the balance between supply and demand will gradually stabilize prices and support more price growth. The average MLS® residential price is forecast to rise by less than one per cent in 2016 to $454,000, and increase two per cent to $463,000 in 2017.

As Canada's authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

For more information, visit www.cmhc.ca or call 1-800-668-2642. CMHC Market Analysis standard reports are also available free for download at www.cmhc.ca/housingmarketinformation.

Follow CMHC on Twitter @CMHC_ca

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