(Reuters) - Canada’s hot housing market will likely cool toward the end of 2012, the government housing agency said on Thursday, even as the price of new homes continued to rise this spring.
Housing starts, which have been buoyant so far this year, will moderate later in 2012 and pull back slightly next year for the first time in four years, a quarterly report by Canada Mortgage and Housing Corp (CMHC) said.
CMHC forecast 202,700 starts in 2012, dropping to 195,700 next year.
The housing market got a strong boost in the first few months of 2012 as a carry-over from 2011, when employment returned to pre-recession levels, Mathieu Laberge, deputy chief economist at CMHC, said in an interview.
“You have more people generating an income, therefore they go out and look for housing.”
The report comes amid a surge in condominium construction in Toronto and Vancouver that has raised concerns about a possible housing bubble.
CMHC’s report said, however, that increases in condo resale prices in Ontario have started to slow as stock has increased.
Still, CMHC forecast that overall resale prices will rise in 2013, with the average price increasing nearly 3 percent to C$383,600 ($372,400).
A rapidly growing economy in oil-rich Alberta continues to attract workers from other provinces, CMHC said, fueling 19 percent growth in total housing starts this year, the fastest in the country.
The selling price of new homes across the country inched up 0.2 percent in April, continuing a steady three-year climb, according to Statistics Canada data on Thursday.
Prices have risen the fastest in the Ontario cities of Toronto and Oshawa - up about 6 percent year over year - followed by Regina, Saskatchewan, which is located near several potash mine projects and the province’s oil patch.
Reporting by Rod Nickel in Winnipeg; Editing by Peter Galloway