Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

May 18, 2016 08:15 ET

Prairie Housing Starts to Decline in 2016, and Rise in 2017

CALGARY, ALBERTA--(Marketwired - May 18, 2016) - According to Canada Mortgage and Housing Corporation's (CMHC) second quarter 2016 Housing Market Outlook, Prairies Highlights, housing starts in the Prairie region are projected to decline in 2016 primarily due to a decrease in activity in Alberta. By 2017, stronger economic growth and improved housing market balance will help lift housing starts in all three Prairie Provinces.

"Economic growth in the Prairie region continues to be negatively impacted by low commodity prices, employment growth continues to be slow and this has negatively impacted housing demand," said Lai Sing Louie, CMHC's Regional Economist. "Many housing markets in the Prairie region are over supplied and it likely won't be until 2017 before we see stronger economic growth and improved market balance supporting some growth in housing starts."

In Alberta, total housing starts are forecasted to decline from 37,282 units in 2015 to between 24,100 to 26,500 units in 2016. Improving economic conditions based on higher commodity prices are expected to help lift housing demand and production in 2017. There is a risk that commodity prices do not rise and this would negatively impact economic activity and housing demand. In 2017, Alberta's housing starts are projected to rise and range from 25,600 to 28,000 units. After declining for three consecutive years, total housing starts in Saskatchewan reached 5,149 units in 2015, but are projected to stabilize and slowly begin increasing and range from 5,000 to 5,600 units in 2016 and from 5,300 to 5,900 units in 2017. In Manitoba, in spite of an expanding economy, an elevated supply of multi-family units will hold back some growth in overall new home production. After 5,501 total housing starts in 2015, Manitoba's total starts are forecasted to range from 5,100 to 5,600 in 2016. By 2017, a lower level of inventory and economic growth in Manitoba is expected to help lift housing starts to between 5,400 and 6,000 units.

In Alberta, MLS® sales are forecasted to decline from 56,477 in 2015 to between 47,900 and 52,500 sales in 2016. Demand is expected to begin rising in 2017 lifting sales to between 48,600 to 53,400 transactions. With oil prices assumed to be higher in the future, economic growth is expected to increase housing demand. In Saskatchewan, economic conditions are not expected to strengthen substantially this year and resale transactions are projected to be similar to 2015's tally of 12,374 sales and range from 12,100 to 12,500 sales in 2016 and rise to between 12,300 and 12,700 sales in 2017. In Manitoba, steady economic and demographic growth and is projected to continue to propel the resale market higher. MLS® sales in Manitoba are forecasted to rise from 14,021 transactions in 2015 and range from 14,400 to 14,800 sales in 2016 and range from 14,600 to 15,000 sales in 2017.

Market conditions in most of Alberta's and Saskatchewan's major markets tend to be in buyers' market conditions, with supply outpacing demand, days-on-the market longer, and downward pressure on prices. Buyers' market conditions in Alberta are expected to lower the average resale price from $393,138 in 2015 to between $383,300 and $386,800 in 2016. Improving market balance due to economic growth is projected to transition the market and start lifting the average price to between $387,200 and $390,800 in 2017. Buyers' market conditions in Saskatchewan is expected move the average price from $296,983 in 2015 to between $290,500 and $299,600 in 2016. Like Alberta, improved market balance from economic growth is expected to lift Saskatchewan's average price to between $294,100 and $303,300 in 2017. In Manitoba, economic and demographic growth has generated market conditions that are supporting price growth. The average price in Manitoba is expected to continue to rise from an average of $270,375 in 2015 to between $272,500 and 276,700 in 2016 and to between $276,300 and $280,700 in 2017.

This release includes video.

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.

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