TORONTO May 22 Canada federal housing agency
lowered its forecast for housing starts but not prices in 2014
and said sales and construction will be flat or barely higher in
2015 as the once-roaring market adjusts to a glut of
condominiums coming onto the market.
Canada Mortgage and Housing Corp said the nation's housing
boom is coming to an end in what officials hope will be a soft
landing as construction slows to more sustainable levels and
sales and prices tick only slowly higher.
The CMHC said on Thursday housing starts will be in a range
of 172,300 and 189,900 units in 2014, with a point forecast, or
most likely outcome, of 181,100 units, down from 187,923 units
in 2013. That is also down from CMHC's February estimated of
The agency said there will be 160,600 to 203,600 units
started in 2015, with a point forecast of 182,100, also a
downwardly revised forecast.
Both forecasts represent a sharp slowdown from the 214,827
starts of 2012, when the market was at record highs and the
government intervened to tighten mortgage lending rules.
"Builders are expected to continue to manage their starts
activity in order to ensure that demand from buyers seeking new
condominium units is first channeled toward unsold completed
units or unsold units that are currently under construction,"
Mathieu Laberge, deputy chief economist for CMHC, said in a
Canada sidestepped the worst of the financial crisis of the
last decade because it avoided the real estate excesses of its
U.S. neighbor, and a post-recession housing boom helped it
recover more quickly than its Group of Seven peers.
But the housing market began to cool in mid-2012 after the
country's Conservative government, worried about a potential
property bubble, tightened mortgage rules. Demand fueled a
strong rebound in 2013, and economists are largely predicting a
softer but stable market this year.
The CMHC forecasts see homebuilding and sales leveling off,
with prices continuing to notch small gains.
CMHC said existing home sales will range from 428,100 and
487,700 units in 2014, with a point forecast of 457,900 units.
That's down from February's forecast of 466,500 units but little
changed from 457,338 units sold in 2013.
For 2015, it expects a move up in sales to a range of
441,800 to 500,400, with an increase in the point forecast to
471,100, down slightly from its February forecast.
Price will continue to rise, and the agency even nudged up
its forecast for price appreciation in 2014 given the strong
start to the year, but said gains will slow in 2015.
CMHC's point forecast for the average price calls for a 3.5
percent gain to C$396,000 in 2014, and a 1.6 percent gain to
C$402,200 in 2015.
(Reporting by Andrea Hopkins; Editing by Sofina Mirza-Reid)