By: The Working Forest Staff
OTTAWA, CNW — Economic uncertainty stemming from containment measures of COVID-19 and falling oil prices is affecting all sectors. Canada’s housing market will see declines in 2020 and should start to improve by this time next year. Housing starts, sales and prices are likely to stay below their pre-COVID-19 levels into 2022. The Housing Market Outlook – Special Edition (HMO) released by Canada Mortgage and Housing Corporation (CMHC) forecasts Canadian housing market activity for 2020 and 2021.
2020 At a Glance:
|Total Housing Starts||147,100||109,500|
|MLS Average Price||$518,400||$493,200|
- House prices could fall by as much as 9% to 18% from their Q1 2020 levels before beginning to recover in 2021. Our forecast reflects different potential outcomes for price growth that could see home prices return to their pre-COVID-19 levels by the end of 2022.
- Regional disparities in economic conditions lead to varying impacts on house prices. In oil-producing Alberta and Saskatchewan, housing prices could experience close to 25% declines from pre-COVID-19 levels.
- Restrictions on construction activity are leading to a sharp decline in housing starts. Our forecast indicates that housing starts could decline by as much as 75% from the Q1 2020 level before starting to recover by the second half of 2021.
- Home sales in Canada could experience as much as a 29% decline from pre-COVID-19 levels before slowly recovering post-2022.
Understanding our Forecast:
Our outlook covers a range of plausible scenarios. The HMO – Special Edition incorporates a wider range for housing indicators than we normally publish, reflecting the heightened risks and uncertainties of the current context. The high end of the forecast depicts a more optimistic scenario while the low end shows a more significant and protracted downturn in the economy and housing market. Our framework is based on key drivers of the housing market activity, including gross domestic product (GDP), trends in the labour market, demography, incomes and mortgage-lending conditions.
Starting in 2020, we moved the release of the HMO to the spring to align with the annual needs of our clients, data availability and our corporate reporting. Because COVID-19 impacts are insufficiently documented at the local level, the 2020 release provides only national and provincial level outlooks.
CMHC supports the housing market and financial system stability by providing support for Canadians in housing need, and by offering housing research and advice to all levels of the Canadian government, consumers and the housing industry.