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Western Canada nation’s hotbed of new home construction
Aug 18, 2006

Western Canada’s new home market is sizzling, according to Canada Mortgage and Housing Corporation’s third quarter Housing Market Outlook.

On the other hand, Eastern Canada’s new home market has been slowing.

In Manitoba, the outlook said favourable demographic and economic conditions will see housing starts surpass 5,000 units this year for the first time since 1988.

CMHC is forecasting that total housing starts will reach 5,150 units by the end of the year and 5,100 units in 2007.

To date, there have been 4,731 housing starts in Manitoba.

“The strength of single-detached construction is demonstrated by the fact that this is only the second time since 1989 that the tally for the first seven months has exceeded 1,000 units (in Winnipeg and the surrounding municipalities),” said Richard Corriveau, CMHC’s regional economist for the prairie and territorial regions.

While multi-family construction in Winnipeg and the surrounding municipalities declined nearly 36 per cent in July, when compared to the same month in 2005, CMHC said this is not a cause for concern.

“The fall off in activity underscores the volatile nature of multi-family construction,” said Corriveau. “With year-to-date multiple-family starts running about 17 per cent ahead of last year’s pace and many projects anticipated to break ground in the coming months, 2006 will represent one of the stronger years of multiple-family construction for Winnipeg in recent memory.”

CMHC said total Manitoba starts are expected to increase by 8.9 per cent, which is only surpassed by the red hot Alberta market that will see a 20 per cent increase.

Across Canada, housing starts will register another strong year in 2006, according to CMHC’s report. 

Starts will reach 227,900 units in 2006, before decreasing to 209,100 units next year. 

Although residential construction will ease, 2007 will mark the sixth consecutive year in which housing starts exceed 200,000 units.

“Housing starts this year will be stronger than previously forecast, mainly due to persistent strong demand in Alberta where starts will increase by 20 per cent in 2006,” said Bob Dugan, CMHC’s chief economist. 

“Higher mortgage carrying costs, due to modest increases in mortgage rates and rising house prices, will temper housing demand in Canada in the latter part of this year and next.”   

MLS® home sales in Canada will register their second best year on record with 481,700 units in 2006, a slight decrease compared to the previous year, according to CMHC. 

The Winnipeg Real Estate Board has reported that this year’s MLS® resale market is expected to be the best in the 103-year history of the board.

Early July marked the first time MLS® dollar volume sales have gone above $1 billion in such a short period of time. The previous record had been $1 billion by mid-August last year.

CMHC said the level of Canadian MLS® sales will remain high in 2007 at 462,200 units, the third highest level on record. However, marginally higher mortgage carrying costs will ease demand for existing homes in many centres.

Strong MLS® price growth in the Western provinces will push the Canadian average price increase to a 17-year high of 12 per cent in 2006. Manitoba’s average resale price will rise by 12.4 per cent this year, predicted CMHC.

In 2007, higher listings and lower MLS® sales will move the Canadian resale market toward more balanced conditions, and growth in average MLS® prices will slow to 6.4 per cent, according to CMHC.