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Home construction to slow in 2012

Home construction to slow in 2012



MONTREAL - Home construction is expected to dip slightly over the next two years in Quebec, but a growing economy and new arrivals to the province will continue to buoy the housing market, the CMHC said today.

The Canadian Mortgage and Housing Corp. said it’s expecting 45,500 starts in 2011 for Quebec, followed by 44,000 starts in 2012, mostly in the category of multiple dwellings. In the province, the average resale price of a home is expected to rise to $251,700 in 2011 and $256,300 in 2012.

In the Montreal area, where nearly half of the units started in 2011 will be condos, new construction is expected to slow through 2012, the CMHC said. Housing starts will drop by 8.4 per cent in 2011 and then by 6.2 per cent in 2011, the federal agency said.

In Montreal, which generates nearly half the new construction in the province, condos are beginning to sit empty in 2011, as the pace of construction exceeds the rate of absorption.

“For the first time in four years, inventories of new condominiums available in the short term will rise,” said Bertrand Recher, a CMHC senior market analyst for Montreal.

Recher attributed a waning demand for new homes to the continued easing of the resale market and the gradual rise in mortgage rates. According to CMHC’s base case scenario, posted mortgage rates will remain relatively flat in 2011 before increasing moderately in 2012. For 2011, three and five year posted mortgage rates are forecast to be in the 4.1 to 5.6 per cent range, rising to the 4.2 to 6.3 per cent range in 2012.

A change in the federal mortgage rules will impact the housing market nationally, driving sales in line with “demographic fundamentals,” the CMHC said.

The crown agency said it expects housing starts will range between 166,600 and 192,200 units in 2011, with a point forecast of 179,500. That’s a slight dip from 2010 numbers, when Canada posted 189,930 housing starts.

By ALLISON LAMPERT
SOURCE:The Montreal Gazette

Read more: http://www.montrealgazette.com/business/Home+construction+slow+2012/4862366/story.html#ixzz1NvPuBWSE