“A weaker outlook … will bring moderation in housing starts next year,” said Mathieu Laberge, a CMHC economist. “Nevertheless, employment growth and net migration will help support housing starts activity going forward.”
Canada’s new home market is expected to continue to moderate in the last quarter of 2012 and into 2013, writes the Crown corporation in its 2012 fourth quarter report, released Monday. In the meantime, activity in the existing home market is expected to hold steady, leading to house price growth in line with or slightly below inflation.”
Those factors have collectively contributed to the CMHC’s forecast for vacancy rates, projected to hold steady at 2.2 per cent in 2012 before declining to 2.0 per cent in 2013. The drop – higher in Toronto and other key urban centres – reflects slowing rental construction and strong rental demand due to high migration.
Relatively stable projections for employment are also expected to offer landlords a helping hand as they head into the first half of 2013.
“Low vacancy rates are expected to help support the multiple starts housing segment, through expansion of the rented condominium market,” according to the CMHC outlook.
Still, investors, even in areas with decreasing vacancy rates are likely to find their own acquisition plans hampered by a tighter lending market. The phenomenon is being blamed on government changes to mortgage rules coupled with new guidelines for federally-regulated lenders. It’s a double whammy that may ultimately hurt Canada’s fragile economic recovery, charge some analysts.
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