Decline in housing starts, slower price growth in Metro Victoria market, CMHC outlook report


File photo.

File photo.

Canada Mortgage and Housing Corporation’s (CMHC) 2018 housing market outlook predicts the real estate market will moderate over the next two years, including in Victoria.

In its market forecast 2019 and 2020, the agency also predicts housing price growth to continue its slow down while the vacancy rate will climb over one per cent.

CMHC says fundamental demand-side factors such as population growth, employment growth, and affordability shows modest levels of construction moving forward.

Rising mortgage rates and overvaluation is seen in the capital region and will likely mean a decline in sales because of affordability for new buyers.

CMHC says price growth remains above inflation and the fundamental factors but should slow down to a more sustainable pace over the next two years.

Part of that slowdown could come from an increase in condo sales over single-detached homes and buyers have more options to choose from as supply is introduced over the forecast time frame.

According to CMHC, a vast majority of new households in Victoria are choosing to live in rentals, rather than owning their own home.

CMHC says the current rate of Metro Victoria rental construction has not been seen since the late 1970’s and will help ease the tight vacancy rate.

Rent is expected to climb, though, to catch up to current market price because of newly built apartments and tenant turnover.

The CMHC outlook says the average rent in Victoria is well below what new renters are paying and as older units turnover, rents will increase to reflect new price levels.


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