Residential construction this year and next in the capital region is expected to beat a 10-year average as the housing market stays strong.
However, housing starts will begin to ease off in 2017 as mortgage rates move higher, Canada Mortgage and Housing Corp. said in its spring report.
This year, between 2,100 and 2,300 new housing units — which include houses, condominiums, townhouses and apartments — are expected to go up in Greater Victoria, the report said. That’s up from 2,008 units built last year.
And next year will likely see between 1,900 and 2,200 units under construction, the federal agency said.
“Demand for existing homes will remain higher than the available supply, keeping market conditions in seller’s territory and resulting in upward pressure on prices in 2016 before moving toward balanced conditions in 2017,” CMHC said of Greater Victoria.
The number of sales through the Victoria Real Estate Board’s multiple listing service will continue increasing this year, declining somewhat in 2017. CMHC is predicting that mortgage rates will move up to some degree.
CMHC is expecting home construction to be slower in most of the country over the next two years compared with 2015, though it noted that stark differences in outlook have emerged in various regions — including Victoria.
Nationally, the agency said that between 181,300 and 192,300 housing units will be started this year and the range for 2017 will be between 172,600 and 183,000 units. Those ranges compare with 195,535 housing starts in 2015. However, the national numbers tell only part of the story.
“Our forecast shows that there are important provincial variations within the Canadian housing market,” CMHC chief economist Bob Dugan said. “Increased housing starts in Ontario and B.C. will be more than offset by declines in provinces affected by the drop in oil prices in 2016.”
Citing data from the private-sector Multiple Listing Service, CMHC expects between 501,700 and 525,400 units of previously owned homes will be resold in 2016 and between 485,500 units and 508,400 units in 2017. Those compare with 505,673 resales last year, according to MLS figures.
The Crown corporation said the national average price will rise to as much as $495,800 this year and $501,000 next year. The averages don’t adjust for high prices in the Lower Mainland region and parts of southern Ontario.
Since the previous estimates late last year, CMHC has raised its expectations for Ontario and B.C. housing starts and lowered them for Alberta. Ontario starts are estimated at between 71,300 and 73,500 for 2016, up from 70,156 last year. B.C.’s starts are estimated at between 35,300 and 36,700 in 2016, up from 31,446.