Housing Market Outlook Q3 2012

New Housing Market outlook is out and there are not too many changes
On a quarterly .basis, growth in the average MLS® price is expected to slow moving forward over the forecast horizon.  Nevertheless, balanced market conditions are expected in most local markets across Canada over the rest of 2012.  This forecast calls for an average price of $368,000 in 2012 (same as in Q1 report) and $377,300 in 2013.

Ontario is posting a reduction in total housing starts.

Looking ahead, balanced market conditions are expected to prevail in most local housing markets and the average MLS® price should grow at a rate close to inflation, or slightly below, through 2012.  However, 2013 will see a moderation in the quarterly price growth path.

A moderating outlook for the existing home market for the remainder of 2012 is expected to lead to moderation in the growth of renovation expenditure in 2012, when compared to 2011. This will give way to a rebound in renovation activity in 2013, supported by stronger growth in employment relative to 2011 and 2012.

Mortgage Rates 

Short-term mortgage rates and variable mortgage rates are expected to remain near historically low levels, which will help support housing demand.  The outlook’s base case also assumes that mortgage rates will remain flat in the short term.

Employment

In the 12 months to June 2012, employment grew by 1.0 per cent (+181,000), while the unemployment rate stood at 7.2 per cent. Over this period, full-time employment rose 1.6 per cent (+221,500), while part-time fell 1.2 per cent (-40,400).  Employment is forecast to grow 1.3 per cent in 2012 and 2.1 per cent in 2013, which will support Canada’s housing sector.

Vacancy Rates

Moving forward, it is expected that there will continue to be modest purposebuilt rental construction and strong rental demand due to high immigration. This, however, will be partly offset by an expanding rented condo market. As a result, vacancy rates across Canada’s metropolitan centres will remain relatively stable this year and next.

Changes to Mortage Insurance Rules

New measures announced for government-backed mortgage insurance will help ensure the sustainability of housing market activity and help stabilize house price growth.

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