Canada Mortgage and Housing Corp. says the country’s real estate market is expected to moderate over the next two years as the increase in housing prices is expected to slow to more in line with economic fundamentals.
In its 2018 housing market outlook released Tuesday, the national housing agency projects housing starts and sales are both expected to decline in 2019 and 2020.
It predicts housing starts for single and multi-unit starts will fall to between 193,700 and 204,500 in 2019, while sales are anticipated to be between 478,400 and 497,400 units. Prices are anticipated to range between $501,400 and $521,600.
CMHC says it expects economic indicators like income and employment to continue to help support demand for housing starts, but these fundamentals are anticipated to slow down to a more sustainable pace.
Rising mortgage rates are also expected to affect housing demand and the resale market.
By 2020, CMHC anticipates demand will continue to shift toward relatively less expensive housing options like apartment condominiums versus higher-end single-detached homes.
“Over our forecast horizon, housing starts are projected to decline from elevated levels recorded recently. Resales should also moderate while house prices are expected to reach levels that are more in line with the fundamentals,” Bob Dugan, chief economist at the CMHC, said in a statement.