Sales of existing home to moderate in 2012, rebound in 2013
MONTREAL – New home construction is to drop 12 per cent in 2012, but resales and prices should continue rising in the Greater Montreal Area over the next two years, Canada Mortgage and Housing Corp. said Monday.
Waning demand for new homes and a more balanced resale market will lead to a six per cent drop in Greater Montreal housing starts to 18,800 units next year, even as the average price of a new home rises two per cent from $326,500 to $333,100 in 2013, CMHC said in a forecast.
“The decline will be felt mainly in the condominium segment, where rising inventories of unsold new (units) will force builders to slow the pace of construction in relation to the last two years,” said CMHC senior market analyst Bertrand Recher.
In Greater Montreal, new condo starts are expected to decline from a record-breaking 12,680 last year to just under 12,000 units in 2012. They should dip a further 10 per cent in 2013, with prices expected to rise a minimal zero to two per cent, Recher said, citing an unofficial forecast.
With the condo market shifting to balanced and even in favour of buyers in select parts of the city, Recher wouldn’t rule out a dip in condo prices, although he’s not expecting a major correction.
“In certain areas, we’re not excluding a small drop in prices,” he said.
Housing resales are to rise a lacklustre 0.8 per cent in 2012, following a softer second half of the year.
Tougher mortgage rules introduced in July have accelerated an already slowing housing market in Canada’s large cities, with sales declining 15 per cent nationally and some economists forecasting a 10-to-15-per-cent drop in prices by 2014. On Monday, per centue of permits issued in Canada unexpectedly fell by 13.2 per cent in September from August, dragged down by a major drop in the non-residential sector, Statistics Canada data indicated. The fall – the greatest since the 23.7-per-cent plunge recorded in April 2011 – was far greater than the three-per-cent decrease forecast by market operators, Reuters reported, although the value of residential permits climbed by 0.4 per cent after two monthly decreases.
Canadian cities, including Montreal, remained among the strongest for new home construction in North America during the first half of 2012, according to data from RealNet Canada. In Montreal was ranked eighth in North America for highest number of new housing starts, following Vancouver in sixth place and the Greater Toronto Area at the top of the list, RealNet said Monday. Apart from Toronto, Canadian cities have been slipping in the ranking with several U.S. markets improving in 2012.
By Allison Lampert, The Gazette