Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

February 06, 2015 08:15 ET

Prairie Housing Starts to Decrease in 2015 and 2016

CALGARY, ALBERTA--(Marketwired - Feb. 6, 2015) - According to Canada Mortgage and Housing Corporation's (CMHC) first quarter 2015 Housing Market Outlook, Prairies Highlights, report released today, housing starts in the Prairie region are projected to decrease from 55,067in 2014 to 49,600 in 2015 and 48,000 in 2016.

"Lower oil prices will have a dampening effect on investment and economic growth, particularly in Alberta and to a lesser extent Saskatchewan. This will contribute to slower employment growth and net migration, in turn slowing housing demand. With key drivers less supportive of housing demand and supply levels elevated in some markets, housing starts in the Prairie region are expected to decline in 2015 and 2016," said Lai Sing Louie, CMHC's Regional Economist.

In Alberta, housing starts will decrease from 40,590 units in 2014 to 36,000 in 2015 and 34,500 in 2016. In Saskatchewan, housing starts will decline from 8,257 in 2014 to 7,300 in 2015 and 7,200 in 2016. In Manitoba, starts will remain close to 2014 production and remain relatively stable with 6,300 units in 2015 and 6,300 in 2016.

While the large number of migrants to the Prairie region over past years will support sales in the resale market, economic uncertainty created by declining oil prices will impact employment and temper demand. In Alberta, after increasing by over nine per cent to 71,773 in 2014, MLS® sales will decrease to 71,100 in 2015 before edging higher to 71,600 in 2016 as economic conditions improve. In Saskatchewan, MLS® sales are forecast to decrease from13,868 in 2014 to 13,600 sales in 2015 and remain near this level in 2016. MLS® sales in Manitoba are projected to edge higher from sales of 13,782 in 2014 to 14,000 in 2015 and 14,200 in 2016 as employment growth increases.

After leading the Prairie region with a 5.2 per cent price gain in 2014, Alberta will record more modest price growth moving forward. With rising listings and lower demand in 2015, price growth in Alberta will ease to below two per cent to an average of $407,100 in 2015 and $415,000 in 2016. In Saskatchewan, the average resale price rose by 3.3 per cent to $298,359 in 2014. As sales growth flattens, price growth in Saskatchewan will also ease to below two per cent lifting the average price to $302,500 in 2015 and $307,800 in 2016. In Manitoba, the average resale price rose 2.1 per cent in 2014 and is projected to rise by 2.3 per cent to $272,400 in 2015 and $278,800 in 2016 as sales trend higher.

Downside risks have increased since the previous forecast, due mainly to recent declines in oil prices. As a result, we have widened the forecast ranges for housing starts, MLS® sales and average MLS® prices to reflect these risks. In Alberta, where the risks associated with oil prices are most pronounced, housing starts are expected to range between 23,400 and 38,700 units in 2015 and between 20,300 units to 38,000 units in 2016. MLS® sales are expected to range between 58,000 and 74,800 units in 2015 and between 50,900 units to 76,200 units in 2016. The average MLS® price is forecast to be between $376,800 and $420,400 in 2015 and between $380,700 and $431,600 in 2016.

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 advice 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.

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Information in this release:

Additional data is available upon request

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