Canada Mortgage and Covering Corp. says the country’s real estate market is expected to dull over the next two years as the growth in housing prices begins to quiet to be more in line with economic fundamentals.
In its 2018 housing sell outlook released Tuesday, the national housing agency projects shield starts and sales are both expected to decline in 2019 and 2020.
It predicts shelter starts for single and multi-unit starts will fall to between 193,700 and 204,500 in 2019, while car-boot sales are anticipated to be between 478,400 and 497,400 units. Prices are anticipated to assortment between $501,400 and $521,600.
“Our key takeaway from this year’s outlook is moderation in Canada’s cover markets for 2019 into 2020,” Bob Dugan, chief economist at the CMHC, judged in a statement.
“Housing starts are expected to decline from the higher squares we’ve seen recently. We expect resales in 2019 and 2020 to remain unbefitting recent peaks, while prices should reach levels that are multifarious in line with economic fundamentals such as income, job and populations cultivation.”
The agency expects the number of single-detached housing starts to decrease due to a mass of factors including the availability of lot sizes, housing prices and higher refer to costs.
Multi-unit starts were also expected to decline, partly attributable to smaller nullified growth in the age group between 25 to 34, who make up a large correspondence of first-time buyers. But some of the downward trend could be offset by an year population looking to downsize.
The agency expects demand will proceed to shift toward relatively less expensive housing options cast apartment condominiums versus higher-end single-detached homes.
CMHC estimates it still sees global trade as a “risk” to the Canadian economy and the dwelling market, despite the recent trade agreement reached between Canada, the U.S. and Mexico.
Shake up mortgage rates are also expected to affect housing demand and the resale merchandise.
In the outlook, CMHC says it anticipates housing prices will “respond to slightly” after some moderation.
“However, slower employment and GDP swelling, as well as gradually increasing mortgage rates, will restrain the multiplication in demand for existing homes by 2020,” said the report. “As demand acts to lower levels relative to new supply, market conditions are expected to relieve.”
It also warned that Canadian households remain vulnerable due to ungraceful debt loads.
“If interest rates or unemployment rates were to cause more than expected, heavily indebted households could physiognomy greater constraints on their consumption leading to downward pressure on the briefness and housing activity,” CMHC said.