Housing starts to fall slightly in 2008



    OTTAWA, Feb. 4 /CNW Telbec/ - Housing starts reached 228,343 units in
2007, an increase of 0.4 per cent from 227,395 in 2006, according to Canada
Mortgage and Housing Corporation's (CMHC) first quarter Housing Market
Outlook, Canada Edition report. In 2008, residential construction will decline
to about 211,700 units, given higher mortgage carrying costs. Nevertheless,
Canada's housing market remains strong and 2008 will mark 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 Bob Dugan, Chief Economist
for CMHC. "This has strongly supported Canada's housing markets. 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."
    Existing home sales, as measured by the Multiple Listing Service
(MLS(R))(1), are poised to experience a very strong year with about
520,000 units in 2007, a 7.6 per cent increase over 2006. In 2008 the level of
MLS(R) sales is expected to fall by 3.9 per cent to 499,650 units, while 2009
will see an additional decrease to 488,300. Growth in the average MLS(R) price
has remained high at 10.6 per cent in 2007, mainly because of continued strong
price pressures in Canada's western provinces. However, as most resale markets
move toward more balanced conditions, growth in average MLS(R) price is
forecast to slow to 5.2 per cent in 2008 and 3.8 per cent in 2009.
    At the provincial level, British Columbia's housing starts, which have
been above historical averages, are expected to decline in 2008. It is
anticipated that a continuing tight labour market, robust income growth and
high levels of consumer confidence will help to offset the dampening effect of
rising mortgage carrying costs on the demand for new and existing homes in
British Columbia. Housing starts should decline from 39,195 units in 2007 to
33,250 in 2008 and 31,700 in 2009. The average MLS(R) price in British
Columbia will grow by 12.1 per cent in 2007, 6.0 per cent in 2008 and
5.0 per cent in 2009. This moderation is due to increased listings and fewer
resales bringing more balanced supply and demand conditions to existing homes.
    Alberta continues to experience very low unemployment and continuing
overall prosperity. Despite these positives, the province is expected to face
a drop in net migrants between now and the end of 2008 due to the growing
difference in provincial house prices and improved labour market conditions in
other provinces. These factors will combine to reduce housing starts from
48,336 units in 2007 to 39,500 in 2008 and 37,750 in 2009. Following an
unprecedented 30.7 per cent gain in 2006, and a forecasted strong
24.4 per cent rise in 2007, the average MLS(R) price is expected to climb by
3.9 per cent in 2008 and 5.4 per cent in 2009.
    During 2007, Saskatchewan experienced steady economic growth, a healthy
employment situation and gains in net migration. This contributed to strong
housing demand. Total housing starts reached 6,007 units in 2007, the highest
level in 24 years. However, escalating costs will push housing starts down to
5,600 units in 2008 and 5,300 in 2009. The average MLS(R) price in
Saskatchewan will rise by 31.7 per cent during 2007, 26.4 per cent in 2008 and
8.2 per cent in 2009.
    Manitoba is one of five provinces whose economic growth is expected to
exceed the national average for 2007. This success has contributed to a
five-year high in job creation, which has increased net migration to levels
not seen since 1982. These factors will contribute to healthy levels of new
home construction through 2008. Total housing starts reached 5,738 units in
2007, the best performance in 20 years. Starts will edge up slightly to
5,800 units in 2008 and 5,900 in 2009. The average MLS(R) price in Manitoba
will rise by 12.5 per cent in 2007, 9.8 per cent in 2008 and 5.7 per cent in
2009.
    The Ontario economy is expected to improve slightly during 2008 and this
will help sustain housing demand across the province. New home construction
activity will be moderate between now and the end of 2008. Housing starts are
expected to move up from 68,123 units in 2007 to 69,150 units in 2008, while a
more modest economy in 2009 will push starts down somewhat to 67,150 units.
The average MLS(R) price in Ontario will rise by 7.6 per cent in 2007, while
2008 and 2009 should see increases of 6.2 per cent and 2.9 per cent,
respectively.
    Solid job creation and steady economic growth in Quebec during 2007
pushed housing starts up by 1.4 per cent to 48,553 units. A moderation of the
economy will cause a slight shift downwards in 2008 to 46,500 units and 45,375
in 2009. A reasonably healthy resale market will also fuel average MLS(R)
price growth in Quebec; 6.6 per cent in 2007, 3.8 per cent in 2008 and
3.0 per cent in 2009.
    In New Brunswick, rising mortgage carrying costs, a slower economy and
more choice in the resale market will result in lower levels of new home
construction. Housing starts are forecast to decline from 4,242 units in 2007
to 3,925 in 2008, a decrease of 7.5 per cent. Moving into 2009, starts are
expected to fall to 3,650 units. The average MLS(R) price in New Brunswick
should rise by 8.1 per cent during 2007, 3.6 per cent during 2008 and
2.8 per cent during 2009.
    Nova Scotia will experience slower employment and population growth
during 2008, causing new home construction activity to be more restrained.
Housing starts are forecast to stabilize from 4,750 units in 2007 to 4,550 in
2008 and 4,500 in 2009. The average MLS(R) price in Nova Scotia is expected to
rise by 7.5 per cent for 2007, while 2008 and 2009 will see growth of
4.4 per cent and 2.6 per cent, respectively.
    Prince Edward Island's economy is expected to undergo modest economic
growth through 2008. As a result, housing starts will slowly decline from
750 units in 2007 to 700 in 2008 and 675 in 2009. The average MLS(R) price in
Prince Edward Island will rise by 6.0 per cent in 2007, 3.4 per cent in 2008
and 3.3 per cent in 2009.
    In Newfoundland, a strong export-driven economy has pushed housing demand
up. However, it is expected that higher homeownership and construction costs
and lower employment growth will dampen housing demand in 2008. Housing starts
for 2007 were up 18.6 per cent to 2,649 units. For 2008, minimal change is
expected at 2,650 units. Meanwhile, 2009 will see an additional increase of
0.9 per cent to 2,675 units. The average MLS(R) price in Newfoundland will
rise by 7.0 per cent in 2007, 7.2 per cent in 2008 and 6.3 per cent in 2009.

    As Canada's national housing agency, Canada Mortgage and Housing
Corporation (CMHC) draws on over 60 years of experience to help Canadians
access a variety of quality, environmentally sustainable, and affordable
homes - homes that will continue to create vibrant and healthy communities and
cities across the country.

    For more information, call 1-800-668-2642.

    
                           National Housing Outlook

    Key Housing Market Indicators
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                            2007          2008          2009
                                          Actual     Forecasts     Forecasts
                                       --------------------------------------
    Total housing starts (units)         228,343       211,700       204,700
    Total single-detached houses         118,917       106,300       101,100
    Total multiple housing units         109,426       105,400       103,600
    Total MLS(R) sales(1)                519,722       499,650       488,300
    Average MLS(R) selling price ($)     306,407       322,400       334,500
    -------------------------------------------------------------------------


                         Provincial Housing Outlook

    Total Housing Starts
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                            2007          2008          2009
                                          Actual     Forecasts     Forecasts
                                       --------------------------------------
    Newfoundland and Labrador              2,649         2,650         2,675
    Prince Edward Island                     750           700           675
    Nova Scotia                            4,750         4,550         4,500
    New Brunswick                          4,242         3,925         3,650
    Quebec                                48,553        46,500        45,375
    Ontario                               68,123        69,150        67,150
    Manitoba                               5,738         5,800         5,900
    Saskatchewan                           6,007         5,600         5,300
    Alberta                               48,336        39,500        37,750
    British Columbia                      39,195        33,250        31,700
    -------------------------------------------------------------------------
    

SOURCE: CMHC Housing Market Outlook, Canada Edition, First Quarter 2008. -------------------- (1) The term MLS(R) stands for Multiple Listing Service and is a registered trademark of the Canadian Real Estate Association (CREA). Data are for 10 provinces. All 2007 MLS(R) figures are estimated as at the time of the forecast. Final figures have since been released by the Canadian Real Estate Association.

For further information:

For further information: on this release: Kristen Scheel, CMHC Media
Relations, (613) 748-4632, kscheel@cmhc.ca; Julie Girard, CMHC Media
Relations, (613) 748-4684, jgirard@cmhc.ca; This release is also available on
the CMHC Web site: http://www.cmhc-schl.gc.ca


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