Image by: unsplash

Canada's national housing agency, the CMHC, is projecting a worsening scenario for the country's housing market in the coming years. Despite a booming population and lower interest rates expected to drive housing demand, the agency anticipates a challenging landscape ahead. Existing home prices are forecasted to surge over the next few years, propelled by increased activity. However, despite efforts such as providing helicopter money to stimulate development, the CMHC predicts a decrease in annual new home starts during this period, indicating a potential imbalance between demand and supply.

The CMHC's projections indicate a significant rise in existing home prices fueled by interest rate cuts. With an expected average sale price of $711,429 by the end of the year, representing a 4.9% increase from the previous year, the trend is poised to continue upward. Substantial growth is forecasted for 2025, followed by moderation in 2026, with the average existing home price reaching $814,851 by that year. Notably, much of the housing activity is anticipated to occur in smaller, more affordable cities, reflecting shifting market dynamics.

While cheaper mortgage credit is predicted to bolster existing home sales, the overall volume is expected to remain relatively weak. The CMHC foresees an increase in existing home sales over the forecast period, although the growth rate is projected to slow down by 2026. Conversely, despite efforts to incentivize development with financial support, annual new home starts are forecasted to decline, indicating a potential mismatch between demand and supply. Against the backdrop of a weaker economy, these trends present challenges for both buyers and developers, highlighting the complex interplay of economic factors in the housing market.

Read the full article on: BETTER DWELLING