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Ontario housing market to see slower growth over the next three years, says new Central 1 Credit Union forecast

TORONTO — Home ownership and growth in the Ontario market is expected to trend downward in the coming three years, says a new forecast by Central 1 Credit Union (Central 1).

New policy constraints, higher mortgage rates, and moderate economic growth have already cooled the market, with home sales down 27 per cent from the same time in 2017 says the report, Ontario Housing Forecast 2018 – 2020, by Edgard Navarrete, Central 1 Regional Economist for Ontario.

“Government efforts to slow the housing market and control mortgage debt growth, combined with a moderating labour market and increased inflation, has fewer people entering the homeownership market. This in turn is increasing demand of and reducing availability of rentals,” says Navarrete.

After a period of contraction through 2018, sales will increase in both 2019 and 2020, by five per cent and 4.5 per cent respectively. Ontario’s median price growth will slow from 10.6 per cent in 2017 to two per cent in 2018. “Homeowners interested in selling are able to bide their time until prices start to climb again due to solid economic conditions,” adds Navarrete.

Highlights:

  • Housing starts have dropped 4.1 per cent in 2018 to date over the same period in 2017, and will decline 3.5 per cent by 2020 but remain elevated at 75,500 units
  • Despite expansion in the stock of rental housing units in the province, the vacancy rate has decreased to 1.3 per cent due to elevated demand.

“Housing demand remains robust as people continue relocate to Ontario and form households; however, the flip side is that the economy and policies are making home purchase more difficult for some residents and forcing them to enter or remain in rental,” says Navarrete.

Ontario Housing Forecast 2018 – 2020 also addresses short-term housing market speculation in the Toronto and Hamilton metro areas. Central 1 research shows flipping has risen but remains low relative to history. Sales held for one year or less in Toronto was 5.7 per cent in early 2018, with Hamilton at 6.4 per cent. “Speculation is not widespread and likely a minor contributor to price increases in the current cycle, but likely higher in recent years when price appreciation was stronger,” noted Helmut Pastrick, Central 1 Chief Economist.

Read the full report – Ontario Housing Outlook 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.

Contacts:

Edgard Navarrete
Regional Economist
Central 1 Credit Union
T 905.282.8501 or 1.800.661.6813 ext.8501
E enavarrete@central1.com

Nicole Adams
Director, Member & External Communications
Central 1 Credit Union
T 604.714.6581 or 1.800.661.6813 ext. 6581
E communications@central1.com