The Canada Mortgage and Housing Corporation (CMHC) expects the housing market to cool off next year.
CMHC has released its financial report for the second quarter of 2016. It reveals that, as of June 30, the crown corporation insured $523 billion of homeowner mortgages. The average insured loan amount for the first six months of the year was $237,628, which is 0.5% higher than it was during the same period last year.
In the report, CMHC predicts that housing starts will slow in 2016 and 2017, dropping from 181,300 to 192,300 units in 2016 to between 172,600 and 183,000 units in 2017: a reduction compared to 2015 when there were 195,535 starts. As for Multiple Listing Service (MLS) sales, they are expected to decline from 501,700 to 525,400 units in 2016 to between 485,500 and 508,400 next year, while the average MLS price in Canada will increase modestly from $474,200 to $495,800 in 2016 to somewhere between $479,300 and $501,100 in 2017.
"Demand for existing units is expected to moderate relative to 2015 and 2016, reflecting demographic trends and the gradual rise in mortgage rates," reads the report. "Higher prices in 2016 following a strong start to the year led by British Columbia and Ontario. The rate of price growth for 2017 is expected to slow because of a composition shift with a reduction in more expensive resale units, and an increase in moderately priced resale units. Furthermore, a projected slowdown in demand from rising mortgage rates in the second half of 2017 will contribute to slower price growth."