CMHC report exposes divided market
It’s the same old story for the Canadian housing market – lower oil prices are leaving oil-producing provinces such as Alberta vulnerable while other markets like Ontario and B.C. continue to benefit.
Housing markets will remain stable as housing starts vary slightly in 2015-2016, according to a second quarter Housing Market Outlook report, however vulnerabilities remain as oil prices stagnate.
“Lower oil prices are contributing to disparities between provincial housing markets,” said Bob Dugan, chief economist for CMHC, in a statement. “A slowdown in housing starts and resale transactions in oil-producing provinces such as Alberta will be partly offset by increased housing market activity in other provinces, such as Ontario and British Columbia.”
The comments come as oil-producing provinces remain entrenched in short-term uncertainty as oil prices have contributed to what the CMHC are calling disparities between provincial housing markets. Meanwhile, Ontario and B.C. continue to reap the benefits of declining energy prices, a lower Canadian dollar and low mortgage rates.
“Since the inventory of completed and unabsorbed units remains above the historical average, we expect the pace of new home construction to moderate over the next couple of years as builders focus on managing the existing inventory,” Dugan added.
According to CMHC stats, the average price is forecasted to be between $398,191 and $457,200 with a point of forecast of $428,325.
Housing starts are expected to range between 166,540 and 188,580 units 2015, with a point forecast of 181,618 units. For 2016, housing starts are forecast to range from 162,840 units to 190,830 units, with a point forecast of 181,800 units.
Nationally, sales are expected to range between 437,000 and 494,500 units in 2015 while sales are expected to range from 424,000 to 491,300 units in 2016.
“Due to the recent decline in oil prices, our assessment is that there is more downside risk than upside risk to our forecast,” the CMHC report reads.