Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

November 26, 2013 12:00 ET

CMHC Housing Outlook Conference

QUÉBEC CITY, QUÉBEC--(Marketwired - Nov. 26, 2013) - Canada Mortgage and Housing Corporation (CMHC) presented its annual Housing Outlook Conference today to about 500 industry professionals. Under the theme "Beacons to guide you," the speakers analyzed the state of the real estate market in the country, the province and the Québec census metropolitan area (CMA) and also spoke about what will shape tomorrow's market.

National outlook

CMHC expects total housing starts to be stable in 2014, as fundamentals, such as employment growth and migration, continue to support the Canadian housing market.

On the new home market, builders are nevertheless expected to limit the number of housing starts, while inventories of unabsorbed units, completed and under construction, are drawn down. On the resale market, homebuyers have been motivated to advance their purchases and lock in pre-qualified mortgages, given the recent moderate increase in mortgage rates. It is expected that existing home sales will increase modestly in 2014, with improving economic conditions.

Provincial Outlook

In Quebec, the rather slow economic and employment growth recently will lower demand on the existing and new home markets this year. "The decline in activity on the resale market and the relatively large inventories of new homes will cause housing starts to fall considerably in 2013," said Kevin Hughes, CMHC's Senior Economist for Quebec. That being said, the demographic trends will support housing demand until 2014. At that time, activity on both the existing and new home markets will pick up thanks to a stronger economy and a tighter resale market.

In 2013, single-detached home starts will be weakened by the current economic environment and the easing of the resale market. Such starts will record a decrease of 17.2 per cent. Meanwhile, starts of multiple-unit housing units, which are in an absorption phase, will register a drop of 24.3 per cent. In 2014, starts of single-detached homes and multi-unit housing will remain relatively stable (13,200 and 23,500 units, respectively). Single-detached houses should stop losing market shares, while the condominium segment will still be in its absorption phase.

In 2013, transactions on the resale market will decrease by 5.5 per cent. Next year, when conditions will be more conducive to homebuying, resales will start rising again. An increase of 2.6 per cent is forecast for 2014. There has been less pressure on prices in the last few quarters, as demand for existing homes has decreased and supply has increased. This should continue throughout 2014. With the market more balanced, the growth in prices on the resale market will keep weakening in 2013. The average Centris® price will reach $268,000 this year and then move closer to $270,000 in 2014.

Regional Outlook - Québec CMA

Next year, housing demand will continue to be supported by a solid job market but will be less strong than in recent years. As well, the area should post a gain in net migration in 2014. The favourable demographic trend will help fuel demand for housing, especially rental units.

Next year, Centris® sales are expected to increase by 6 per cent, compared to 2013, for a total of 6,900 transactions. But this level will still be below the average for the last ten years. Market conditions will remain softer, and this will ease the pressure on prices. The average Centris® price of residential properties will rise by 3 per cent in 2013 and then by 2 per cent, to $271,000, in 2014.

Several factors are working toward a decline in construction this year and next: the slowdown in employment growth, the broad choice of residential properties for sale and the gradual rise in mortgage interest rates. The new home market will therefore be adjusting over the forecast horizon, and total housing starts will fall by 30 per cent in 2013 and by 11 per cent next year.

Québec and its sectors: diversified trends - Québec CMA

This year, the slowdown on the single-family home resale market equally affected the central and suburban zones, both of which registered decreases in Centris® sales. On the supply side, the upward trend in Centris® listings was apparent in both the centre and the suburbs. This allowed the market to ease slightly in 2013. Despite this easing, several sectors still post relatively tight conditions and remain favourable to sellers. As well, the slight easing of the market contributed to slowing the growth in prices of the single-family home.

On the new home market, the decrease in activity more significantly affected the central zone. Starts of single-detached, semi-detached and row homes followed a downward trend, in both the centre and the suburbs. Conversely, conventional rental multi-unit housing construction was strong in 2013, and almost all sectors of the CMA posted gains in starts of this type.

The slowdown also extended to condominiums. On the resale market, Centris® transactions registered decreases in both the centre and the suburbs, and the supply of condominiums rose everywhere. Consequently, market conditions eased, with buyers now favoured everywhere across the CMA. The abundant supply of condominiums for sale affected construction, which slowed down. For the first nine months of the year, starts were down in almost all sectors of the CMA.

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.

Follow CMHC on Twitter @CMHC_ca.

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