OTTAWA (Reuters) - Canadian home sales and new construction will likely dip by 2017 even as prices broadly rise in a market where regional differences will continue to play out, the country’s federal housing agency predicted on Wednesday.
Canada’s housing market has been robust in the years since the financial crisis, partly boosted by low interest rates. But the drop in oil prices has led to divergences as commodity-sensitive regions slow and major cities such as Toronto and Vancouver accelerate.
That trend is expected to continue, with slower growth in the provinces of Alberta, Saskatchewan and Newfoundland to be partly offset by stronger activity in British Columbia and Ontario, the Canadian Mortgage and Housing Corporation said in its spring report.
Although the CMHC revised its forecast for housing starts slightly higher to an annual range of 181,300 to 192,300 units in 2016, that still marks a slowdown from 195,535 starts last year. The report sees starts falling further in 2017 to between 172,600 and 183,000.
Resales are expected to rise to 501,700 to 525,400 this year as the Canadian economy recovers, but are seen falling to the lower range of 485,500 to 508,400 in 2017.
But the average resale price is forecast to rise to between C$474,200 ($365,386) and C$495,800 this year and C$479,300 to C$501,100 next year. That is well above 2015’s average price of C$442,999.
Average home prices in British Columbia and Ontario are seen as continuing to outpace the national average. Although expected price gains this year are being led by more sales of expensive single-detached homes, CMHC expects to see fewer high-end sales and more sales of moderately priced homes in 2017.
Reporting by Leah Schnurr; Editing by Frances Kerry