A new report is predicting conventional mortgage approvals to grow by 4.8 per cent in 2012 with total mortgage approvals rising 1.8 per cent, though that is down from earlier predictions.
In its 2012 Spring Metropolitan Housing Outlook, The Conference Board of Canada in partnership with Genworth Canada, downgraded its forecast for total mortgage approvals “due to a bigger decline in high-ratio mortgages (–1.8 per cent this time compared with –0.7 per cent last time).” Its forecast for conventional mortgages is an increase of 0.4 percentage points over the previous forecast.
The report also forecast 2.5 per cent growth in new home prices in 2012 and 2.4 in 2013.
In the resale market, price growth this year is now expected to be weaker in 2012, but stronger in 2013. “A softening market will result in resale price growth slipping to just 0.9 per cent in 2012, down from our expectation of 2 per cent growth in the last Metropolitan Housing Outlook,” said the report. “Next year, resale price growth should reach 3.2 per cent, a modest increase from the 3 per cent growth forecast previously.”
The Conference Board also said that Canada’s new home market has also been stronger of late, due to low interest rates, which continue to encourage builders. “As a result, starts are now expected to reach 193,000 units this year, an upward revision from 186,200 units last time,” stated the report. “But the market is expected to weaken through 2012, pushing starts lower in 2013. Indeed, the current outlook calls for housing starts of 191,500 units next year, down significantly from 202,100 units in the previous forecast.”