TORONTO (Reuters) - Canadian housing starts are expected to stabilize into 2012, while sales of existing homes will rise slightly and price rises will moderate, Canada Mortgage and Housing Corp (CMHC) said in its quarterly outlook on Friday.
The forecasts by the federal housing agency build on previous data suggesting Canada’s hot housing market has begun to cool, though prices in some areas continue to ratchet higher as borrowing costs remain low.
“Despite continued uncertainty in the global economy, Canada’s economic fundamentals remain positive, particularly with respect to interest rates, employment and immigration,” Mathieu Laberge, deputy chief economist for CMHC, said in a statement.
“These factors will continue to support Canada’s housing sector in 2012.”
The agency said housing starts will fall to 186,750 units in 2012 from an estimated 191,000 in 2011, a 2.2 percent decline.
Sales of existing homes will edge up to 458,500 in 2012 from an estimated 450,100 this year, a 1.9 percent gain, while the average price is forecast to rise by a moderate 1.2 percent to C$368,200 in 2012 from C$363,900 in 2011.
Canadian house prices dipped during the recession, but bounced straight back and have climbed since. Homebuyers have taken on record debt to buy at historically high prices.
The federal government has tried to engineer a soft landing for housing by imposing tighter rules for government-insured mortgages. The changes, which took effect in March, cap mortgage terms at 30 years instead of 35 and cut the amount homeowners can borrow against their homes.
Recent economic data and a gloomy global economic outlook, however, mean interest rates are likely to remain low, which may continue to encourage buyers.
Reporting by Andrea Hopkins; editing by Peter Galloway