New home construction in the Inspiration Community project by developers Tribute Communities in Richmond Hill, Ont., is seen in this file photo.Moe Doiron/The Globe and Mail
The construction of new homes, which was higher than expected this year, will slow down next year, Canada Mortgage and Housing Corp. forecast Monday.
Resales of existing homes should hold steady, resulting in house price growth that's roughly in line with or a bit below inflation, the Crown corporation added in its quarterly outlook.
While there were indications of slowing in September, housing starts have generally defied economists' expectations this year, largely as a result of the high level of condominiums being built.
In the past two years developers planned a large number of towers, and presold a large number of condo units, that are now coming on stream.
"A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year," Mathieu Laberge, deputy chief economist at CMHC, said in a press release. "Nevertheless, employment growth and net migration will help support housing starts activity going forward."
CMHC now expects that, on an annual basis, housing starts will be in the range of 210,800 to 216,600 units this year – well above economists' forecasts at the outset of this year – and in the range of 177,300 to 209,900 units next year.
Resales over the Multiple Listing Service are expected to rise from about 457,400 homes this year to about 461,500 in 2013.
CMHC forecasts that the average price of a resale home will rise 0.2 per cent nationally this year, to $365,100, and 1.5 per cent next year, to $370,500.
Separately, Statistics Canada said Monday that the value of building permits issued in September fell 13.2 per cent to $6.5-billion after a jump of 9.5 per cent in August.
The agency says the September decline was mainly due to a 30.8 per cent drop in the non-residential sector, following a 27.7 per cent increase in August.
In the residential sector, the value of permits edged up 0.4 per cent to $4.2-billion, following two consecutive monthly decreases.
With files from The Canadian Press