Housing starts cooling in 2007 and 2008

    OTTAWA, Aug. 15 /CNW Telbec/ - Housing starts will moderate in 2007,
reaching 220,000 units, a decrease of 3.2 per cent from 2006, according to
Canada Mortgage and Housing Corporation's (CMHC) third quarter Housing Market
Outlook, Canada Edition report. Residential construction will continue to
decline in 2008 to 207,200 units, yet will mark seven consecutive years in
which housing starts exceed 200,000 units.
    "Despite high employment levels, income gains and low mortgage rates,
housing starts will trend downwards in 2007," said Bob Dugan, Chief Economist
at CMHC. "The slight pull back in housing starts this year and next will be
mainly due to the continued growth in house prices coupled with modest
increases in mortgage rates. The level of new home construction will decrease
in all provinces except for Manitoba, Quebec, and Saskatchewan."
    Existing home sales, as measured by the Multiple Listing Service
(MLS(R)) (1), will register their best year on record with 514,450 units in
2007, a 6.5-per-cent increase over 2006. The record activity in the Prairies
will be a key factor leading to the increase in the national level of MLS(R)
sales compared to the previous year. The level of MLS(R) sales is expected to
reach 494,750 units in 2008, its second highest level on record. Growth in the
average MLS(R) price will remain high at 9.9 per cent in 2007 mainly because
of continued strong price pressures in Western Canada. 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.
    At the provincial level, British Columbia home starts will remain above
historical averages but will decline slightly. Income growth, a tight labour
market, 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 will decline slightly from
36,443 units in 2006 to 35,525 units in 2007, and continue to ease to
32,500 units in 2008. The average MLS(R) price in British Columbia will grow
by 11.7 per cent in 2007 and by 6.3 per cent in 2008 as increased listings and
fewer resales bring supply and demand for existing homes into more balance.
    Despite the record low unemployment rate and abundance of job
opportunities, Alberta will see a net drop in migrants over the next two years
due to the growing difference in provincial house prices and improved economic
performances elsewhere across Canada. With lower migration and higher mortgage
carrying costs, housing starts will ease from 48,962 units in 2006 to
47,300 units in 2007 and 44,500 units in 2008. Despite the decline in housing
starts, 2007 will be the third best year on record. Following an unprecedented
30.7-per-cent gain in 2006, the average MLS(R) price is expected to climb
another 26.1 per cent in 2007 and 9.7 per cent in 2008.
    In Saskatchewan, steady economic growth, a healthy employment situation
and gains in net migration have contributed to the strong housing demand.
Total housing starts are forecast to reach 5,700 units in 2007, the highest
level in 24 years. Escalating costs will push housing starts down to
4,900 units in 2008, making it the second highest level of starts since 1986.
The average MLS(R) price in Saskatchewan will rise by 24.2 per cent and
10.4 per cent in 2007 and 2008, respectively.
    In Manitoba, economic growth will exceed the national average,
contributing to a five-year high in job creation, thus increasing net
migration to levels not seen since 1982. These factors will contribute to the
high levels of new home construction expected over the next two years. Total
housing starts will reach 5,500 units in 2007, the best performance in
20 years, and will edge lower to 5,250 units in 2008. The average MLS(R) price
in Manitoba will rise by 11.2 per cent and 7.5 per cent in 2007 and 2008,
    An improving economic outlook in Ontario will help sustain a high level
of housing demand across the province. New home construction activity will
moderate over the next two years but remain near historical averages. Housing
starts will decline from 73,417 units in 2006 to 66,950 units in 2007 and to
64,500 units in 2008. The average MLS(R) price in Ontario will rise by
5.3 per cent and 3.4 per cent in 2007 and 2008, respectively.
    Continued steady economic growth in Quebec, coupled with solid job
creation, will cause housing starts to increase from 47,877 units in 2006 to
48,100 units in 2007. Starts in Quebec will slide to 45,000 units in 2008.
Thanks to the strong resale market, the average MLS(R) price growth in Quebec
will be 6.2 per cent in 2007 and 2.2 per cent in 2008.
    In New Brunswick, the positive labour market conditions will help reduce
the net outflow of interprovincial migrants in 2007 and 2008. Nevertheless,
rising mortgage carrying costs and more choice in the resale market will
result in lower levels of new home construction. Housing starts are forecast
to decline from 4,085 units in 2006 to 3,750 units in 2007 and 3,625 units in
2008. The average MLS(R) price in New Brunswick will rise by 6.4 per cent and
3.5 per cent in 2007 and 2008, respectively.
    In Nova Scotia, slower employment and population growth, coupled with
higher personal debt levels will constrain new home construction activity over
the next two years. Housing starts are forecast to ease from 4,896 units in
2006 to 4,475 units in 2007 and to 4,300 units in 2008. The average MLS(R)
price in Nova Scotia will rise by 5.5 per cent and 3.4 per cent in 2007 and
2008, respectively.
    Prince Edward Island's economy is expected to expand at a modest pace
over the two coming years, and employment will continue to grow by less than
one per cent per year. As a result, housing starts will decline from 738 units
in 2006 to 625 units in 2007 and 590 units in 2008. The average MLS(R) price
in Prince Edward Island will rise by 3.0 per cent and 2.6 per cent in 2007 and
2008, respectively.
    In Newfoundland, higher homeownership and construction costs and lower
employment growth will dampen housing demand over the next two years. Housing
starts will move lower from 2,234 units in 2006 to 2,100 units in 2007
followed by a decrease to 2,025 units in 2008. The average MLS(R) price in
Newfoundland will rise by 0.7 per cent and 1.2 per cent in 2007 and 2008,
    Renovation spending will continue its upward trend through to 2008 thanks
to strong growth in the Canadian economy, low mortgage and interest rates, and
a solid housing sector. In 2007, renovation spending will increase by 9.8 per
cent to reach $49.9 billion. As activity in the resale market begins to slow,
growth in renovation spending will ease to 6.8 per cent in 2008 to reach
$53.3 billion.

    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.

    (1) Multiple Listing Service (MLS(R)) is a registered certification mark
        owned by the Canadian Real Estate Association.

                           National Housing Outlook

    Key Housing Market Indicators

                                      2006             2007           2008
                                    Actual        Forecasts      Forecasts
    Total housing starts (units)   227,395          220,000(1)     207,200(1)
    Total single-detached houses   121,313          113,600(1)     104,100(1)
    Total multiple housing units   106,082          106,400(1)     103,100(1)
    Total MLS(R) sales(2)          483,223          514,400(1)     494,800(1)
    Average MLS(R) selling
     price ($)(2)                  277,020          304,500(1)     320,300(1)

                         Provincial Housing Outlook

    Total Housing Starts
                                      2006             2007           2008
                                    Actual        Forecasts      Forecasts
    Newfoundland and Labrador        2,234            2,100          2,025
    Prince Edward Island               738              625            590
    Nova Scotia                      4,896            4,475          4,300
    New Brunswick                    4,085            3,750          3,625
    Quebec                          47,877           48,100         45,000
    Ontario                         73,417           66,950         64,500
    Manitoba                         5,028            5,500          5,250
    Saskatchewan                     3,715            5,700          4,900
    Alberta                         48,962           47,300         44,500
    British Columbia                36,443           35,525         32,500


SOURCE: CMHC Housing Market Outlook, Canada Edition, Third Quarter 2007. --------------------------- (1) Rounded off to the nearest hundred. (2) 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.

For further information:

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

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