Posted by: AdminS
Earlier this week, the CMHC released their Housing Outlook report for the third quarter of 2012.
Here are some of the highlights of the report:
“On an annual basis, sales of existing homes through the Multiple Listings Service (MLS) are expected to move slightly upwards in both 2012 and 2013.”
466,600 and 469,600 sales of existing homes are forecast for 2012 and 2013 respectively. The CMHC report credits sales to move higher due to moderate employment growth, low interest rates and modest personal income growth.
CMHC predicts that Alberta, Newfoundland and Labrador and Saskatchewan will be the leaders in MLS sales activity. Alberta has been forecast for an increase of 11.2% growth in sales, with Newfoundland and Labrador at 8.3% and Saskatchewan at 6.6%. Ontario sales have been expected to modestly decline with the 2012 sales forecast at -0.4% and the 2013 forecast at -2.1%
In 2012, the average price of a home on the MLS is expected to grow at the rate of inflation, or slightly below it according to the CMHC.
During 2013, Canadians are to expect further moderation in price growth according to the report’s forecasts. MLS prices in Ontario have increased 3.8% and 1.3% in the first half of 2012 and are expected to finish at a total of 5.6% on the year. Predictions for Ontario prices in 2013 are more modest in nature; Ontario is expect to see an annual increase of 0.6% in the price of housing sales.
The CMHC report has forecast the 5 year posted rates on fixed mortgages to remain in the 5.0% to 5.5% range during 2012 and 2013 – these rates fall in line with the posted rates you would find today amongst the largest Canadian banks. The posted rates for a 5 year fixed rate mortgage among the biggest Canadian banks sit currently between 4.99% and 5.24%.
The CMHC report cites the strength of the Canadian economy among other developed nations as a reason to expect an increase in migration to Canada. The CMHC predicts an increase in net migration to 255,000 in 2012 and 263,000 in 2013.
Ontario leads the way in net migration among provinces with a forecast of 86,200 migrants in 2012 and 94,500 in 2013.
The CMHC forecasts the Canadian gross domestic product to increase by 2.1% and 2.2% in 2012 and 2013 respectively with employment to increase by 1.3% in 2012 and 2.1% in 2013.
The anticipation is that the gains in GDP, historically low interest rates and increases in employment will work to increase the number of people who can afford to purchase homes.
Collectively, the latest Housing Outlook report from the CMHC forecasts many of the same statistics from earlier reports, mainly that Canadians should expect modest growth in key housing stats. From a mortgage-only standpoint, the anticipation that interest rates should remain relatively flat is good news. Canadians coming up for renewal in the next two years should continue to enjoy historically low interest rates and they may continue paying off their mortgages at lower interest rates.