OTTAWA, Oct 24 (Reuters) - Canada’s housing market is expected to recover in the next two years, the country’s national housing agency said on Thursday, after recent declines in new construction, sales and prices.
In its annual housing outlook, the Canada Mortgage and Housing Corporation said housing starts in 2019 would likely decline to between 188,500 and 196,000 units before stabilizing at around 200,000 units in 2020 and 2021 - a figure below the 10-year high of 219,763 units in 2017.
Home sales and prices were expected to increase over the next two years thanks to income and population growth, the agency said, noting that sales, which have declined since 2016, could reach between 498,000 and 519,100 by 2021 as household disposable income grows.
“Existing home sales will remain essentially flattened in 2019,” Bob Dugan, CMHC’s chief economist, told reporters on a conference call. “However, sales will then start to increase, offsetting much of the recent declines we’ve seen by 2021.”
CMHC said the average home price in Canada is projected to hit around C$488,000 ($373,174.28) in 2019, down from the C$511,830 high in 2017. By 2021, the agency said the average price for a home could be between C$539,800 and C$569,600.
Global trade tensions and high levels of household debt continue to be vulnerabilities, CMHC cautioned. If interest rates or unemployment rose more than expected, “households could face greater budgetary constraints leading to downward pressure on the economy and housing activity,” it said. ($1 = 1.3077 Canadian dollars) (Reporting by Kelsey Johnson; Editing by Dan Grebler)