Soft Landing and Regional Variances for Canada's Condo Markets

Genworth Canada Releases Winter 2015 Metropolitan Condo Outlook

TORONTO, March 26, 2015 /CNW/ - The long-predicted soft landing for condominium markets in cities across Canada is in sight for 2015, with modest gains in sales and prices in most major Canadian cities, according to the latest Conference Board of Canada condo report released by Genworth Canada. The Winter 2015 Metropolitan Condo Outlook forecasts positive condominium price appreciation in most major cities, with the exception of Calgary and Edmonton which are expected to experience some softening as a result of lower oil prices.

"From a national perspective, these findings support an overall balanced outlook on Canada's condo market for 2015, with the exception of certain oil-exposed regions," said Stuart Levings, President and CEO of Genworth Canada.  "We continue to see evidence that population growth and employment remain key drivers of demand for condos in urban centres."  

Divergent underlying economic conditions help to explain the majority of the regional differences in sales and prices.   According to the report, Toronto and Vancouver will see the strongest GDP advances, while economic growth will be weakest in Calgary and Edmonton. This uneven economic backdrop, combined with growing inventories in some markets, is expected to trim starts in all but Quebec City, Ottawa, Vancouver and Victoria. Still, all eight cities are predicted to experience decent population growth over the forecast period, providing continued support for condominiums.

"While the health of apartment condominium markets varies significantly by region, nowhere do we see a bubble about to burst," said Robin Wiebe, Senior Economist at the Centre for Municipal Studies at The Conference Board of Canada. 

Resale prices for condominiums are expected to rise modestly in most of the eight cities during 2015, but drop in Calgary and Edmonton. British Columbia is poised to do well with resale price increases of 2.1% and 4.5% projected for Vancouver and Victoria respectively.

Median Resale Condo Price by City: Forecast

City


2014


2015f


2016f

Québec City  


227,172


229,006


232,293



0.9


0.8


1.4

Montréal  


270,368


277,168


283,286



2.2


2.5


2.2

Ottawa  


261,041


264,509


271,304



0.7


1.3


2.6

Toronto  


319,503


325,668


331,214



3.5


1.9


1.7

Calgary  


276,000


266,991


264,142



8.4


-3.3


-1.1

Edmonton  


219,392


209,359


208,173



1.7


-4.6


-0.6

Vancouver  


377,929


385,859


396,694



2.8


2.1


2.8

Victoria  


274,675


287,186


293,642



2.4


4.5


2.3

Italics indicate percentage change from previous year.


Sources: The Conference Board of Canada; Canadian Housing Time Series Database;
Canadian Real Estate Association; Québec Federation of Real Estate Boards. Average
resale prices are used for Québec City and Montréal; median resale prices are used
for the rest of the metropolitan areas. Resale prices in Montréal and Québec City cover
all condo styles, not just apartments.


According to the Conference Board, the following are projected outlooks on each of the major cities:

  • Québec City will see its second straight year of sales growth although most of that activity is expected in the second half of the year as GDP and employment growth trend upward. Prices will rise only modestly but starts are projected to edge higher after two straight years of decline. 
  • Montréal's challenged economy will result in moderate price growth. Oversupply is intensifying as demand fails to keep pace with the still rising number of units under construction. A slight market correction is a real forecast risk. 
  • Ottawa will benefit from a gradually strengthening economy. Sales will inch higher in 2015 with additional growth forecast in coming years, yet remain well off the pace set earlier in the decade. Prices will edge up but starts are expected to jump by almost 10% in 2015 after two years of decline.
  • Toronto's continuing healthy population growth and relatively positive GDP and employment outlook will generate ongoing increases in sales and prices, although gains will be moderate compared to peak years earlier in the decade. Housing starts will decline for the third consecutive year, reducing the likelihood of a significant market correction.
  • Calgary's economy will be hit in 2015 as declining oil prices lead to declines in GDP and employment. The soft economy will result in price and sales declines in 2015. Starts are also expected to retreat as the market adjusts to this rapidly shifting economic landscape.
  • Edmonton's condominium market will also experience declining sales and prices in 2015.  As in Calgary, the depth and duration of the market's downturn directly depend on oil prices.
  • Vancouver's housing recovery is expected to largely continue in 2015, producing further sales and price growth. Nevertheless starts are expected to remain relatively low as inventories remain stubbornly high. Offshore demand continues to boost prices in this market making it the report's least affordable city.
  • Victoria's condominium market will be positively impacted by a rallying economic outlook and modestly improved job growth. Although sales and price advances will remain very mild by recent standards, they will continue. Large inventories of unsold apartments will keep apartment condominium starts low.

Produced twice a year, the Metropolitan Condo Outlook is commissioned by Genworth Canada from the Conference Board of Canada. The Report reviews a wide range of condominium statistics and offers an in-depth analysis of the trends in the condominium market for eight large Canadian metropolitan areas: Québec City, Montréal, Ottawa, Toronto, Calgary, Edmonton, Vancouver and Victoria. A copy of the report is available at http://genworth.ca/en/about-us/about-us-publications.aspx.

About Genworth Canada

Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada), is the largest private residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For almost two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at December 31, 2014, Genworth Canada had $5.8 billion total assets and $3.3 billion shareholders' equity. Find out more at www.genworth.ca.

Special Note Regarding Forward-Looking Statements

Certain statements made in this press release contain forward-looking information within the meaning of applicable securities laws ("forward-looking statements").  When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company are intended to identify forward-looking statements.  Specific forward-looking statements in this document include, but are not limited to, statements with respect to possible changes in the condominium market.

The forward-looking statements contained herein are based on certain factors and assumptions, certain of which appear proximate to the applicable forward-looking statements contained herein.  Inherent in the forward-looking statements are known and unknown risks, uncertainties and other factors beyond the Company's ability to control or predict, that may cause the actual results, performance or achievements of the Company, or developments in the Company's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.  Actual results or developments may differ materially from those contemplated by the forward-looking statements.

The Company's actual results and performance could differ materially from those anticipated, as a result of both known and unknown risks, including the Company's expectations regarding its revenues, expenses, losses on claims and operations; the Company's anticipated cash needs and its estimates regarding its capital expenditures, capital requirements, reserves and its needs for additional financing; the Company's ability to accurately assess and manage risks associated with the policies that are written; the Company's ability to accurately manage market, interest and credit risks; anticipated trends and challenges in the Company's business and the markets in which it operates; changes in the global or Canadian economies.

This is not an exhaustive list of the factors that may affect any of the Company's forward-looking statements.  Some of these and other factors are discussed in more detail in the Company's AIF dated March 17, 2014.  Investors and others should carefully consider these and other factors and not place undue reliance on the forward-looking statements.  Further information regarding these and other risk factors is included in the Company's public filings with provincial and territorial securities regulatory authorities (including the Company's AIF) and can be found on the SEDAR website at www.sedar.com. The forward-looking statements contained in this press release represent the Company's views only as of the date hereof.  Forward-looking statements contained in this press release are based on management's current plans, estimates, projections, beliefs and opinions and the assumptions related to these plans, estimates, projections, beliefs and opinions may change, and therefore are presented for the purpose of assisting the Company's security holders in understanding management's current views regarding those future outcomes and may not be appropriate for other purposes.  While the Company anticipates that subsequent events and developments may cause the Company's views to change, the Company does not undertake to update any forward-looking statements, except to the extent required by applicable securities laws.

SOURCE Genworth MI Canada

For further information: or to arrange interviews, please contact: Lisa Azzuolo, Director, Communications, Genworth Canada, 905.287.5520 or Lisa.Azzuolo@genworth.com

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