Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

November 22, 2011 12:00 ET

CMHC Housing Outlook Conference

MONTRÉAL, QUEBEC--(Marketwire - Nov. 22, 2011) - Canada Mortgage and Housing Corporation (CMHC) presented its annual Housing Outlook Conference today to about 1,000 industry professionals. Under the theme "A Broader Vision," the speakers addressed the state of the real estate market in the Montréal census metropolitan area (CMA) and across the province and also presented an overview of current and future conditions in the Canadian housing sector.

According to Karen Kinsley, President and Chief Executive Officer of CMHC: " the resilience of Canada's housing finance system can be linked to a combination of factors, including prudent mortgage lending and insurance practices, a strong banking sector and careful regulatory oversight".

Across the country

Canadian housing starts are forecast to stabilize to slightly more moderate levels in 2012. "Despite continued uncertainty in the global economy, Canada's economic fundamentals remain positive, particularly with respect to interest rates, employment and immigration. These factors will continue to support Canada's housing sector in 2012," said Bob Dugan, Chief Economist at CMHC.

Housing starts will be in the range of 161,650 to 206,350 units in 2012, with a point forecast of 186,750 units. The resale market is expected to remain in balanced conditions next year. In 2012, MLS® sales are expected to move up modestly and be in the range of 406,100 to 509,000 units, with a point forecast of 458,500 units. The increase in the average MLS® price is expected to be consistent with the balanced market conditions that have prevailed so far in 2011, and that are expected next year.

Across the province

Given the current moderation and uncertainty, economic growth in Quebec is not expected to surpass the 2-per-cent mark in 2012. As for employment, relatively stable growth is anticipated for next year (+1.4 per cent).

"The economic environment, while moderate, will nevertheless support housing demand next year. As well, the demographic trends will continue to have an impact on the market, especially on the demand for apartments—rental and condominium," said Kevin Hughes, Regional Economist at CMHC for the province of Quebec.

After declining for a year, resale market activity will gradually pick up again thanks to the economic environment and an increase in the housing stock. While demand was declining, increased supply has led to an easing on the resale market. This is the case in each market segment; however, among the regions, market conditions vary. In this context, prices will register smaller increases.

As for residential construction, the easing of the resale market is reducing demand for new homes this year. After declining in 2011, single-detached home starts will rebound slightly next year. Following two years of sustained construction, a notable decrease in multiple-unit housing starts is anticipated for 2012.

Montréal CMA

Resale market

On the resale market, demand brought forward into 2010 gave way to a pullback and a decrease in MLS® transactions in 2011. In all, 40,200 sales will take place in the Montréal CMA this year, compared to 42,308 in 2010, for a decrease of 5.0 per cent. On the supply side, 2011 has been marked by a rebound in listings, particularly in the condominium segment. As a result, softer conditions in all market segments and a gradual easing of the pressure on prices are being observed. The average price will reach $313,000 in 2011, for an increase of 5.2 per cent over last year.

Next year, the economic fundamentals will continue to fuel demand for existing homes but will not bring about a strong increase in transactions, which will remain below their 2010 level. In 2012, 41,500 MLS® sales should be registered, or 3.2 per cent more than in 2011. The growth in supply observed in 2011 will continue in 2012, and the resale market will move closer to balanced conditions next year. The condominium segment will be balanced in all large geographic sectors of the metropolitan area, including the Island of Montréal. The growth in the average MLS® price will slow down again slightly in 2012 (+2.9 per cent), and the average price will reach $322,000.

Residential construction

After having registered a rebound in activity in 2010, attributable to the appeal of condominiums and the short supply on the resale market, the new home market will slow down this year and next year. In 2011, residential construction will fall in all market segments, with the notable exception of condominiums, which will set a new starts record for a second straight year. Housing starts will decrease by 2.7 per cent, to 21,400 units.

In 2012, a decline in the condominium segment will be mainly responsible for the overall decrease in activity. The rise in the number of available new condominiums and the greater choice on the resale market will cause construction to slow down in this market segment. As for seniors' housing construction, the volume will remain low and stable in comparison with previous years. In all, 19,400 new dwellings will get under way in 2012, or 9.3 per cent fewer than in 2011.

Rental market

In the fall of 2011, the rental housing vacancy rate in the Montréal CMA will remain relatively unchanged at 2.5 per cent, compared to 2.7 per cent in October 2010. In 2012, the many newcomers and employment growth among young people will more than offset the departure of renters for the homeowner market. The vacancy rate will therefore follow a slight downward trend and reach 2.3 per cent.

As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

Contact Information