Despite decreases, prices will continue to rise
Province
B.C. housing starts will be above average this year and next, but move lower during that period as the economy and job growth slows, says the latest forecast from the Canada Mortgage and Housing Corp.
CMHC predicted yesterday that while multiple- and single-family starts will decline this year, the overall level of starts will remain above the 10-year average.
“Tight labour markets will keep wages and incomes rising, and people moving to the province,” said Carol Frketich, CMHC’s regional economist for B.C. “Job gains and the increase in population will fuel demand for both homeownership and rental accommodation.”
Single-family starts will move lower as higher costs for builders and higher prices for buyers shift new housing supply and demand to denser housing forms.
“Costs of construction and new-home prices are two of the factors behind the trend to more multiple-family developments,” said Frketich.
Canada-wide, home construction edged up 0.4 per cent to 228,343 last year, but higher mortgage costs — reflecting higher home prices — will slow the pace of home building this year by 7.3 per cent, to about 211,700 dwellings, the CMHC said, adding that this year will be the seventh-consecutive year in which housing starts exceed 200,000 units.
“Despite some global financial instability with regards to the U.S. housing market, Canada continues to experience robust employment levels, ongoing income gains and low mortgage rates,” said agency chief economist Bob Dugan. “However, housing starts are expected to decrease in 2008 mainly due to recent increases in house prices, which will push mortgage carrying costs higher for home buyers.”
Sales of existing homes, which rose a strong 7.6 per cent last year to about 520,000 units, will also decline, CMHC said, projecting a 3.9-per-cent drop this year to 499,650 and a further 2.2-per-cent slide in 2009 to 488,300.
Prices, meanwhile, will continue to rise but at a much more moderate pace, it said.
The average price of a home rose by 10.6 per cent last year, reflecting continued strong price pressures in Canada‘s western provinces, CMHC said. However, as most markets become more balanced, the increase in prices is expected to ease to 5.2 per cent in 2008 and 3.8 per cent in 2009.
© The Vancouver Province 2008
