Housing starts to dip in 2008 following a rise in 2007

    OTTAWA, Oct. 30 /CNW Telbec/ - Housing starts will reach 227,530 units in
2007, an increase of 0.1 per cent from the 227,395 units in 2006, according to
Canada Mortgage and Housing Corporation's (CMHC) fourth quarter Housing Market
Outlook, Canada Edition report. However, in 2008, residential construction
will decline to about 214,000 units. Despite this drop, 2008 will mark the
seventh consecutive year in which housing starts exceed 200,000 units.
    "Continuing high employment levels, income gains and low mortgage rates
have been a boon to Canada's housing markets. Despite this, however, housing
starts are expected to decrease in 2008," said Bob Dugan, Chief Economist at
CMHC. "The pull back in housing starts next year will be mainly due to the
increases in house prices in recent years, which have pushed mortgage carrying
costs higher."
    Existing home sales, as measured by the Multiple Listing Service
(MLS(R))(1), are poised to experience their best year on record with just over
521,000 units in 2007, a 7.8 per-cent increase over 2006. The high level of
MLS(R) sales will be led by activity in the Prairies. With respect to 2008,
the level of MLS(R) sales will fall by 3.9 per cent, but will still be
slightly over 500,000 units, the second highest on record. Growth in the
average MLS(R) price will remain high at 10.1 per cent in 2007, mainly because
of continued strong price pressures in Canada's western provinces. As most
resale markets move toward more balanced conditions, growth in average MLS(R)
price is forecast to slow to 4.2 per cent in 2008.
    At the provincial level, British Columbia's housing starts will remain
above historical averages but are expected to decline slightly moving into
2008. A tight labour market, 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 slightly from 36,443 units in 2006 to
36,200 units in 2007 and 33,250 units in 2008. The average MLS(R) price in
British Columbia will grow by 12.1 per cent in 2007 and by 6.0 per cent in
2008 as increased listings and fewer resales bring more balanced supply and
demand conditions for existing homes.
    Alberta continues to experience low unemployment, an abundance of job
opportunities, and continuing overall prosperity. Despite these positives,
Alberta 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
economic conditions in other provinces. With lower migration and higher
mortgage carrying costs, housing starts will ease from 48,962 units in 2006 to
47,750 units in 2007 and 42,250 units in 2008. Following an unprecedented
30.7 per-cent gain in 2006, the average MLS(R) price is expected to climb
another 24.4 per cent in 2007 and 6.8 per cent in 2008.
    Saskatchewan has been experiencing steady economic growth, a healthy
employment situation and gains in net migration, all of which has contributed
to strong housing demand. Total housing starts are forecast to reach about
6,000 units in 2007, the highest level in 24 years. However, escalating costs
will push housing starts down to 5,500 units in 2008. The average MLS(R) price
in Saskatchewan will rise by 28.7 per cent in 2007 while 2008 will see growth
in prices of approximately 13.5 per cent.
    Manitoba is one of five provinces whose economic growth is expected to
exceed the national average. This success has contributed 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 between now and the end of 2008. Total housing starts will reach
5,750 units in 2007, the best performance in 20 years. Starts will edge lower
to 5,600 units in 2008. The average MLS(R) price in Manitoba will rise by
11.8 per cent and 8.0 per cent in 2007 and 2008, respectively.
    The Ontario economy is expected to improve slightly heading into 2008.
Accordingly, this will help sustain a high level of housing demand across the
province. New home construction activity will be moderate between now and the
end of 2008. Housing starts are expected to decline from 73,417 units in 2006
to 67,700 units in 2007. For 2008, a slight up-tick to 68,175 units is
expected. The average MLS(R) price in Ontario will rise by 6.2 per cent in
2007, while 2008 should see a more modest increase of 3.3 per cent.
    Solid job creation and steady economic growth in Quebec, will cause
housing starts to increase from 47,877 units in 2006 to 52,400 units in 2007.
Looking ahead to 2008, starts are forecast to slide to 48,420. A buoyant
resale market will also fuel average MLS(R) price growth in Quebec, by 6.8 per
cent in 2007 and 3.3 per cent in 2008.
    Positive labour market conditions in New Brunswick will help stem the net
outflow of interprovincial migrants into 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 4,025 units in 2007 and 3,725 units in 2008. The
average MLS(R) price in New Brunswick should rise by 7.6 per cent and 3.7 per
cent in 2007 and 2008, respectively.
    As slower employment and population growth pervades Nova Scotia, new home
construction activity is expected to be restrained between now and the end of
2008. Housing starts are forecast to stabilize from 4,896 units in 2006 to
4,700 units in 2007 and to 4,525 units in 2008. The average MLS(R) price in
Nova Scotia is expected to rise by 7.5 per cent and 3.3 per cent in 2007 and
2008, respectively.
    Prince Edward Island's economy is expected to expand at a modest, but
stable pace between now and the end of 2008 with employment growth in the
range of one per cent per year. As a result, housing starts will slowly
decline from 738 units in 2006 to 680 units in 2007 and 630 units in 2008. The
average MLS(R) price in Prince Edward Island will rise by 5.6 per cent and
3.8 per cent in 2007 and 2008, respectively.
    In Newfoundland, a strong economy will push housing demand up from
2,234 units in 2006 to 2,325 units in 2007. However, it is expected that
higher homeownership and construction costs and lower employment growth will
dampen housing demand past 2007. Housing starts for 2008 are forecast to fall
by 3.2 per cent to 2,250 units. The average MLS(R) price in Newfoundland will
rise by 6.1 per cent and 6.4 per cent in 2007 and 2008, respectively.

    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     225,738     214,325
    Total single-detached houses             121,313     116,100     107,500
    Total multiple housing units             106,082     109,638     106,825
    Total MLS(R) sales(1)                    483,223     521,070     500,600
    Average MLS(R) selling price ($)         277,020     304,800     317,592

                         Provincial Housing Outlook

    Total Housing Starts
                                                2006        2007        2008
                                              Actual   Forecasts   Forecasts
    Newfoundland and Labrador                  2,234       2,400       2,325
    Prince Edward Island                         738         675         625
    Nova Scotia                                4,896       4,700       4,750
    New Brunswick                              4,085       4,025       3,725
    Quebec                                    47,877      51,975      48,125
    Ontario                                   73,417      67,013      68,175
    Manitoba                                   5,028       5,750       5,600
    Saskatchewan                               3,715       6,000       5,500
    Alberta                                   48,962      47,000      42,250
    British Columbia                          36,443      36,200      33,250


SOURCE: CMHC Housing Market Outlook, Canada Edition, Fourth Quarter 2007. ------------ (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.

For further information:

For further information: on this release: 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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