New Ontario Housing Forecast 2018 – 2020
The report covers regional and provincial economic residential investment and construction, rental market and employment.
ONTARIO, November 22, 2018 – Ontario’s housing market momentum has deteriorated as potential buyers are forced onto the ‘homeownership sidelines’ as they adapt to 2018’s new policies, according to Central 1 Credit Union’s (Central 1) latest Ontario Housing Forecast.
Central 1’s Regional Economist, Edgard Navarrete said the federal mortgage ‘stress test’ added to the drag of last year’s provincial Fair Housing Plan, with first-time buyers chief among those affected.
“First-time buyers have given up on their homeownership dream for now or have been sent off to save more funds to qualify for a mortgage,” Navarrete said.
Large debt loads, increased interest rates, inflation and economic uncertainty have reduced consumer spending across many big-ticket items, including housing.
Residential home sales are expected to decline by 16.8 per cent. The residential median price will grow at just 3.2 per cent in 2018, compared to 18.7 to 25.3 per cent across Toronto and surrounding metro markets from 2016-2017. Sales that do occur during the forecast period will be a greater share of high-density housing or cheaper housing, which puts downward pressure on median growth.
Constrained homeownership trends will continue to place pressure on the rental market despite the government scrapping rent controls from new rental units after November 15, 2018.
Navarette said that the provincial vacancy rates are at all-time lows and are expected to decline further, even with the new provisions that aim to increase rental capacity.
“Combined vacancy rates for apartments and row/townhomes will decline to 1.3 per cent in 2018 from 1.6 per cent in 2017. It may take years for the removal of rent controls to increase capacity in the purpose-built rental market,” Navarrete said.
The strong influx of new international residents will add pressure to a rental market that is already at capacity.
Population growth is predicted to continue with an increase by 1.8 per cent in 2018, 1.6 per cent in 2019 and 1.5 per cent in 2020. Strong population growth will lift potential new household formations to a record high of 95,000 which surpasses 1991’s record of 83,100.
KEY POINTS
- Modest economic growth, increased interest rates, and restrained consumer spending will underpin modest housing market activity up to 2020
- Ontario’s residential home sales are expected to decline by 16.8 per cent and residential median price to grow at 3.2 per cent in 2018
- Ontario’s new home construction to decline by 4.7 per cent to 75,400 units in 2018
- Continued population growth will put further strain on the province’s rental market
- Combined vacancy rates for apartments and row/townhomes declined to 1.3 from 1.6 per cent in 2017 in the purpose-built rental market
- Strong population growth will lift potential new household formations to a record high of 95,000 surpassing 1991’s record of 83,100
Read the full report: New Ontario Housing Forecast 2018 – 2020
About Central 1
Central 1 is a preferred partner for financial, digital banking and payment products and services – fuelling the success of businesses across Canada. With $19.5 billion in assets, we leverage our scale, strength and expertise to power progress for more than 300 credit unions and other financial institutions, enhancing the financial well-being of more than 3.4 million. For more information, visit www.central1.com.
Contacts
Laura McIntyre
Member & External Communications Manager
Central 1
T 604.737.6814 or 1.800.661.6813 ext. 6814
E communications@central1.com
Edgard Navarrete
Regional Economist
Central 1
T 905.282.8501
E enavarrete@central1.com
