a recent Canadian Mortgage and Housing Corporation report (CMHC) says that home ownership will become more affordable in the prairie provinces over the next two to three years.
The report was released on April 27 and contains an outlook on the supply and cost of housing for 2023 to 2025.
The general national picture shows that the supply of housing will not be able to meet the demand. The report says that while prices have fallen, homeownership will become less affordable due to higher mortgage rates and still elevated price levels. Through the end of 2022, the Bank of Canada steadily raised interest rates to the current rate of 4.5%. This has made large purchases more expensive and lowered overall consumer spending.
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The report also provided some context on the national outlook for rentals. He says rental affordability will also decline as demand outstrips supply, especially in Vancouver and Toronto, which are also home to the most newcomers in the country.
When viewed in a regional context, the Prairies and Atlantic region appear to offer more stability.
The prairie provinces
The prairie provinces of Alberta, Saskatchewan and Manitoba are expected to experience more positive housing market developments than other regions in Canada.
The report says this is due to a much smaller decline in housing starts (the number of private homes under construction) in 2023.
It says that high inter-provincial migration has had a positive impact on the market compared to other regions during the forecast period. The median home price in these provinces is less than $470,000 according to the most recent data from the Canadian Real Estate Association.
The report also says that Calgary will see a slowdown in home price growth in 2023 due to lower demand for single-family homes in favor of townhomes and condominiums. As more people demand these lower-priced homes, the broader market is expected to come under pressure to lower prices.
Ontario, British Columbia and Quebec
Three of Canada’s most populous provinces are likely to see significant drops in home starts compared to other regions in Canada.
Toronto, Vancouver and Montreal are home to the largest real estate markets in Canada and are already reporting a limited supply of homes.
Data from Vancouver suggests housing starts will fall as developers face a shrinking customer base for condos, along with rising construction and financing costs. He also anticipates that rental demand will outpace the growth in purpose-built rental supply.
Toronto has a similar outlook, noting high prices over the next two years and a delay in construction as significant factors in the lower housing supply.
Rental market conditions are also expected to remain under pressure. Median rent for a one-bedroom apartment in Toronto is currently $2,400 according to zumpera popular apartment listing website.
atlantic region
The Atlantic region, which consists of Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador, is considered moderate compared to the other regions in the report.
In Halifax, the largest city in the region, home prices have been steadily declining since the April 2022 peak. However, there is a low inventory of homes for sale, which is pushing up prices. The report says the city is still considered affordable for out-of-province buyers from pricier markets.
The report also says that by the end of 2023, a large number of housing starts are expected to come to an end, easing some of the pressure on the market.
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reference: www.cicnews.com