Tuesday, 29 November 2011

Canada's Housing Market to Stabalize: CMHC

The Canadian Mortgage and Housing Corporation (CMHC) Q4 Housing Market Outlook Report is suggesting that 2012 will see a stabilized and balanced real estate market in Canada. The report focuses on 7 key factors that influence real estate and provides an outlook over the next 12 months. The key factors are:
  • Mortgage Rates: Short term and variable mortgage rates are expected to remain at historically low levels. The report assumes they will stay flat until late 2012, which will support housing demand.
  • Employment: In the past 12 months, employment has grown by 1.7% (+294,200). Full-time employment rose by 2.5%, while part-time work declined 1.5%. This overall increase and change to full-time positions will support housing demand.
  • Income: Growth in income improved in 2010 because of the economic recovery and the resulting improvement in the labour market. Income will continue to grow at a slower pace in 2011 and 2012, which will provide moderate support to housing demand.
  • Net Migration: The Canadian economy will continue to attract immigrants from struggling economies (net international migration) which will continue to push net migration up in 2012. This will support housing demand.
  • Resale Market:Market conditions in 2011 and 2012 are expected to be in the balanced market territory.
  • Vacancy Rates:Vacancy rates will remain relatively stable in 2011 and 2012. Modest rental construction and strong rental demand from immigration will be offset by increased competition from the condo market.
  • Natural Population: A low Canadian birthrate (births minus deaths) will lessen the demand for additional housing stock in the medium and long term. This is the only factor currently thought to have a negative affect on housing demand.

With any outlook there are assumptions made based on current market conditions which could impact the accuracy of the report. The US economic recovery is generally seen as the largest risk, as both a faster & slow recovery than expected could skew the results. Other factors are the assumptions made in the projected mortgage rates, GDP, Employment, Income and Migration levels.

All in all the Canadian real estate market appears to be relatively healthy and projected to stay that way for the next 12 months.

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