In 2019 and 2020, Canada’s housing markets should see a moderation in both housing starts and sales. House prices, meanwhile, should reach levels more in line with economic fundamentals like income, employment and population growth.
Those are some of the key takeaways from CMHC’s just-released 2018 Housing Market Outlook (HMO) for Canada. Like previous editions of the national HMO, the latest edition looks ahead, providing a forecast of Canada’s housing markets for the next 2 years.
Looking more specifically at 2019, we expect:
- total housing starts to range from 193,700 to 204,500
- Multiple Listing Service (MLS®) sales to range from 478,400 to 497,400
- the average MLS® price to range from $501,400 to $521,600
Housing starts, 2018 – 2020
Starts are forecast to slow gradually over the next 2 years, coming down from the 10-year peak recorded in 2017. Economic fundamentals, such as income, employment and household formation, will continue to support new residential construction. Their growth will, however slow and housing starts will therefore become more closely aligned with them by the end of 2020.
MLS® sales, 2018 – 2020
After reaching record levels in 2016, MLS® sales declined in 2017. In 2018, sales should continue to moderate, before rising slightly in 2019. Slower growth in the fundamentals, as well as gradually increasing mortgage rates, will, however, keep the increase in check by restraining demand for existing homes through to 2020.
MLS® price growth, 2018 – 2020
Growth in the average MLS® price has been strong over the past 2 years. This growth has been driven by increased sales of higher-end single-detached homes in certain major markets. However, over the course of 2018, this effect has faded. As a result, and because of higher borrowing costs and slower income growth, MLS® price growth should slow this year. By 2020, we expect demand to continue shifting to less expensive housing options. This shift, along with slowing fundamentals, will keep growth in the average MLS® price at modest levels.