Canada's housing market will remain stable for at least two more years, Canada Mortgage and Housing Corp. predicted Monday, with the expected slow growth in the economy keeping house prices in check.
CMHC, the Crown corporation that insures Canadian mortgages, expects little change during 2012 in prices and sales of existing homes, as well as little change in new home construction.
Mathieu Laberge, deputy chief economist at the agency, says low interest rates will keep buyers buying, but the slow economy will put a damper on any price hikes.
"With the Canadian economy set to expand at a moderate pace and mortgage rates expected to remain low, activity levels in 2012 in both new home construction and sales of existing homes will stay close to levels seen in 2011," Laberge said in a CMHC statement.
Mortgage rates will remain flat through most of 2012, CMHC predicts, and start increasing moderately in late 2012 or early 2013.
The average house price across the country will hit $368,900 for 2012. By 2013, it will be $379,000.
Around 457,300 existing homes are expected to change hands in 2012, moving a little higher in 2013 to 468,200 units.
Housing starts are expected to be around 190,000 units this year and 193,800 units in 2013, the CMHC also predicted.
Over 2012, CMHC expects Canada's six eastern provinces will see a contraction in housing starts. By 2013, however, modest growth will return to Quebec and Ontario, they say.
All four western Canadian provinces will see growth in housing starts in 2012, with Alberta leading the way at 13.2 per cent. In 2013, the western provinces except Saskatchewan will see positive growth; Saskatchewan's total starts are expected to contract by 2.7 per cent.
Low mortgage rates have driven demand in the housing markets for years now, causing house prices to rise sharply, particularly in big cities such as Toronto and Vancouver.
Even as the economy has slowed in recent years, the housing market has seen little change. Price growth has slowed in most areas, but not retreated.
Last month, BMO economists suggested Canada would likely avoid a serious housing market crash, with the possible exception of Vancouver.
That analysis, by BMO economists Sherry Cooper and Sal Guatieri, suggested that most markets are more likely to cool rather than collapse over the next couple of years.
The one exception, they said, would be Vancouver and parts of B.C., which will likely experience a more severe correction, because demand from non-resident Chinese investment has been driving up prices.
