Central 1 Credit Union



Central 1 Credit Union

January 17, 2013 06:00 ET

Ontario Housing Market to Recover Slowly From Slump, Says Central 1 Credit Union Forecast

Price collapse unlikely, new report says

TORONTO, ONTARIO--(Marketwire - Jan. 17, 2013) - Ontario home sales will start to rise later this year but prices will be flat this year then increase modestly in 2014, says a new forecast by Central 1 Credit Union.

"Home sales will rise this year and prices will start to bounce back," said Helmut Pastrick, chief economist for Central 1, the trade association and financial facility for credit unions in Ontario and British Columbia.

"I don't see anything that will trigger a market collapse, just the opposite," Pastrick said. "As the Ontario economy recovers the housing market will slowly come back too."

Federal efforts to curb household borrowing and tighten mortgage conditions will remain a drag on the market, the new forecast says.

The report says Ontario home sales have steadied at an annualized rate of 185,000 since September, following a six-month sales decline that pulled the sales pace down by more than 10 per cent. "Fewer sales have led to softer prices, but declines have been insignificant," notes Pastrick.

The average MLS® price was close to $384,000 in the fourth quarter, down less than 1 per cent from April and still about 3 per cent higher than in the same-period of 2011.

Looking at the Toronto condominium market, the report says that increased construction activity has raised fears of a housing glut, but Central 1 does not believe that will happen. "I expect developers will slow construction and continued population growth in Toronto will fill the units," Pastrick said.

Highlights:

  • Home sales hit bottom late in 2012 and will rise in 2013

  • Home prices will be flat, rising 0.8 per cent in 2013 and 2 per cent in 2014 and 2015

  • Real estate listings will drop as potential sellers wait for higher prices

  • Mortgage rates will remain low

  • Outside Toronto the supply of new homes is not excessive

  • Prices are likely to rise the most in the Northwest and in the Hamilton-Niagara area

  • Central 1 does not expect a glut of condos in Toronto

  • Housing starts will decline 10.5 per cent in 2013 and remain stable in 2014

  • Rental vacancy rates will remain low, although the number of units will grow

The full report Ontario Housing Outlook 2013-2015 is available here: http://www.central1.com/publications/economics/pdf/ea/ea%202013_ont01.pdf

About Central 1

Central 1 is the central financial facility and trade association for the B.C. and Ontario credit union systems. Central 1 represents a consumer-oriented, full-service retail financial system that serves three million members and holds $86.2 billion in assets and is owned primarily by its member credit unions, 44 in B.C. and 101 in Ontario.

With offices in Vancouver, Mississauga, and Toronto, Central 1 provides a wide range of services such as liquidity management, direct banking, and flexible payment service solutions. For more information, visit www.central1.com.

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