Construction rate to slow

Wednesday, October 31st, 2007

Pullback in starts due to increase in prices

Derek Abma

Total number of units willl remain impressive despite fewer housing starts in 2008 – AFP FILE PHOTO

OTTAWA — Rising costs are expected to slow the rate of new-home construction and sales of existing homes in 2008, though this year’s numbers are still expected to top 2006’s figures.

In its fourth-quarter outlook, Canada Mortgage and Housing Corp. predicts housing starts to come in at 227,530 this year, up 0.1 per cent from last year.

CMHC forecast a decrease of about six per cent to 214,000 for next year, which would still make for the seventh-straight year housing starts have surpassed 200,000.

“The pullback in housing starts next year will be mainly due to the increases in house prices in recent years, which have pushed mortgage carrying costs higher,” Bob Dugan, CMHC’s chief economist, said in a statement.

Sales of existing homes through the Multiple Listing Service are expected to be just more than 521,000 this year, bettering last year’s total by 7.8 per cent and setting a new record.

That number is expected to decrease by 3.9 per cent next year to just more than 500,000, which would still make it the second-best year on record.

The average MLS resale price is expected to rise 10.1 per cent this year over 2006’s average, slowing to a 4.2-per-cent rise next year.

Migration to Alberta is expected to slow next year due to high housing costs there and improved economic conditions elsewhere in the country.

After a 30.7-per-cent increase in average resale-home prices in 2006, that’s expected to slow to a 24.4-per-cent hike this year and 6.8 per cent next year.

Saskatchewan will see that highest increase in average resale prices this year, at 28.7 per cent, CMHC says, slowing to 13.5 per cent next year.

© The Vancouver Province 2007

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