In The News

Central 1 report finds slower growth for Ontario housing market

Ontario Housing Forecast 2019-2021

The report covers regional and provincial economic housing activity related to residential investment, employment,  federal mortgage policies and external trade influences.

ONTARIO, CANADA, July 24, 2019 — Ontario’s housing market will grow modestly over the forecast period due to the lingering effects of restrictive, federal mortgage policies and external geopolitical trade uncertainty, according to Central 1 Credit Union’s (Central 1’s) latest report.

Central 1’s Regional Economist, Edgard Navarrete, expects Ontario’s homeownership market to continue to feel the policy-induced effects of the mortgage stress tests in 2019.

“Residential transactions are expected to grow below trend at 3.5 per cent in 2019. The CMHC First-Time Home Buyer’s incentive will provide modest, region-specific support to existing and new home demand in more affordable housing markets,” said Navarrete.

Single-family home sales may see an uptick in housing markets beyond the Greater Golden Horseshoe (GGH) area, given relative affordability in these regions. Dampened homeownership demand in Ontario’s larger, dense markets will weigh down on provincial numbers.

Home buyers looking in the Greater Toronto Area’s (GTA) should expect to stick to multi-family home units or seek single-detached homes closer to the boundaries of the GGH and beyond.

With a robust influx of new residents to the province over the next three years, Ontario’s purpose-built rental market will tighten further, as evidenced by a downward trending vacancy rate and increasing average monthly rents.

“Relative affordability has insulated housing markets in some regions yet continued to leave many potential buyers on the sidelines in other markets. This has contributed greatly to Ontario’s overall economic slowdown,” said Navarrete.

External trade concerns and protectionist policies will usher the economic slowdown into 2019, causing a dip in trade and business confidence. Central 1 expects the Bank of Canada to cut its policy rate in early 2020 in response to economic headwinds and aligning with global interest rate trends.

Real Gross Domestic Product (GDP) growth in Ontario is expected to fall below the 2016-2018 average (2.4 per cent), instead ranging between 1.5 and 1.7 per cent.

The labour market will loosen as more people actively seek work and fewer people secure employment, resulting in the unemployment rate increasing from 5.6 per cent in 2018, 5.9 per cent in 2019 and 6.0 percent in 2020 and 2021.

Highlights from the Report

  • Restrictive mortgage lending rules and increased economic trade uncertainty will continue to weigh on Ontario in 2019 and beyond, affecting many areas of the economy.
  • Consumer and business confidence will decline over the forecast horizon, reducing consumer spending and business investment, and anchoring real GDP, employment and wage growth.
  • Homeownership markets will post modest numbers over 2019-2021 – a sluggish economy and restrictive lending rules will affect the quantity, type, and value of homes consumers can afford to purchase.
  • CMHC’s First-Time Home Buyer incentive will drive a modest, overall upward effect on the province’s economy.
  • Range-bound growth in the resale market will translate to very modest growth in new home construction until 2021, when new construction starts will begin to rise.
  • Purpose-built rental markets will remain tight over 2019-2021 as many potential buyers remain firmly sidelined in rental unable to enter homeownership. Increased demand for rental housing from new residents will continue putting upward pressure on monthly average rents.

Read the full report: Ontario Housing Forecast 2019-2021

Media contact

Sarah Roberts, Communications Specialist
T 604.714.6722 E sroberts@central1.com or communications@central1.com