On April 27th, the Canadian Mortgage and Housing Corporation (CMHC) released a report highlighting the prospects of homeownership in the prairie provinces for the next three years. This report provides a significant understanding of the housing supply and cost outlook.
National Housing Outlook
The report describes the current housing market, revealing that the existing housing supply will struggle to meet the growing demand. Despite a decline in prices, homeownership will become less affordable due to higher mortgage rates and persistently elevated price levels.
The Bank of Canada increases the interest rate which makes culminated in the present rate of 4.5%, which lead to increased costs for significant purchases and a slowdown in overall spending.
Rental Market Context
The CMHC report also touches upon the rental market, highlighting a concerning decline in rental affordability. Demand for rentals in Vancouver and Toronto, two cities that also witness significant numbers of newcomers, is outpacing supply, exacerbating the situation.
In terms of regional analysis, the prairie provinces and the Atlantic region appear to offer more stability compared to other areas.
The Prairie Provinces
Alberta, Saskatchewan, and Manitoba known as the prairie provinces, are projected to experience positive advancements in their housing markets.The report attributes this to a smaller decline in housing starts, indicating the number of privately owned homes under construction, projected for 2023. The market in these provinces has benefited from high interprovincial migration, making it more resilient than other regions. Also, according to the Canadian Real Estate Association’s latest data, the average house price in these provinces is currently below $470,000.
Calgary’s Housing Market
The report also highlights that Calgary will witness a slowdown in housing price growth in 2023. This modification is determined by reduced demand for single-detached homes, as more buyers choose townhomes and condominiums.
The rising preference for these lower-priced options is expected to exert downward pressure on prices across the market.
Ontario, British Columbia, and Quebec
Ontario, British Columbia, and Quebec are one of the most populous provinces and might experience a substantial dip in housing starts compared to other regions. Toronto, Vancouver, and Montreal are quite identified for their strong housing markets and currently grappling with a limited housing supply.
Vancouver’s Market Trends
The report indicates that Vancouver’s housing starts will decline due to a shrinking customer base for condominiums and rising construction and financing costs. Additionally, rental demand is expected to outpace the growth in purpose-built rental supply, further straining the market. Similarly, Toronto faces elevated prices and a construction backlog as major factors contributing to a lower supply of housing. It is also predicted that the rental market conditions in Toronto will remain under pressure, with the average rent for a one-bedroom apartment at $2,400, as reported by Zumper, a popular apartment listing web portal.
The Atlantic Region Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador comes under the Atlantic region.In Halifax, the region’s largest city, home prices have steadily decreased since their peak in April 2022. However, a low inventory of homes for sale has led to price increases. Nevertheless, Halifax is still affordable for out-of-province buyers from pricier markets. The report also states that the number of housing will be completed by the end of 2023, which is projected to alleviate some of the market pressure.