CMHC's third quarter outlook forecasts 227,900 housing starts this year, declining to 209,100 starts in 2007, a drop of 8.2 per cent. In May, CMHC forecast 222,200 housing starts this year and 204,100 starts in 2007.
"Housing starts this year will be stronger than previously forecast, mainly due to persistent strong demand in Alberta where starts will increase by 20 per cent in 2006," says CMHC chief economist Bob Dugan. "Higher mortgage carrying costs, due to modest increases in mortgage rates and rising house prices, will temper housing demand in Canada in the latter part of this year and next."
CMHC will release a detailed forecast for the Ottawa housing real estate market next month, but local analyst Pascal-Yvan Pelletier concedes starts will be higher than the 4,850 predicted in May, due to stronger-than-expected construction of apartments.
The two hottest new home markets in Canada, Albert and British Columbia, will both see slower starts next year.
In Alberta, CMHC is forecasting 49,000 housing starts this year and 45,000 in 2007. In British Columbia, starts will decline from 37,000 this year to 34,900 next year.
Ontario starts are forecast to slip from 77,000 this year to 70,000 in 2007. The corporation says the drop in housing starts will reflect decreases in both single and multiple units due to increased choice in the resale market and a limited supply of land.
CMHC is also predicting a slowing in the resale housing market next year, and some easing of price pressures.
The corporation forecasts 481,700 sales of existing homes this year, the second best on record, and 462,200 homes changing hands in 2007. Strong price growth in the western provinces will push the average price increase to a 17-year high of 12 per cent this year. In 2007, higher listings and lower sales will move the resale market toward more balanced conditions, and growth in average prices will moderate to 6.4 per cent.
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ottawabusinessjournal.com
Toronto real estate market update. HOUSING FORECAST FOR 2007
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