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Soft Landing Still Likely for Canadian Condo Market

Genworth Canada Releases Summer 2014 Metropolitan Condo Outlook

TORONTO, Aug. 13, 2014 /CNW/ - Population, economic and employment growth all point to a stabilizing of the Canadian condominium market, according to the latest Conference Board of Canada condo report commissioned by Genworth Canada.  The Summer 2014 Metropolitan Condo Outlook forecasts that while pockets of higher risk still exist in Toronto and Vancouver, a broad-based downturn is unlikely.

"The report findings align with our view that the condo market is stabilizing and that demographics and affordability continue to drive demand" said Stuart Levings, Chief Operating Officer of Genworth Canada.  "As a result of our prudent underwriting standards, our portfolio quality in this market remains strong and we see value in partnering with our customers to meet the evolving needs of young urbanites.

Despite modest price gains over the next two years in all eight cities studied in the report, increases in average household incomes will help to keep mortgage costs affordable.  Continued growth in immigration, affordability pressures in major cities, and aging baby-boomers looking to downsize are all factors that support continued demand for condominiums in urban centres.

"Our research has long shown that the strong underlying economic factors in Canada would help most condominium markets achieve a 'soft landing'" said Robin Wiebe, Senior Economist at the Centre for Municipal Studies at The Conference Board of Canada and co-author of the report.  "Despite fluctuating sales and listing trends, markets are expected to be balanced across the country, with a slight lean towards the buyer in Ottawa, Montreal and Quebec City."

To view infographic of national highlights click here.
To view infographic of regional highlights click here.

Regional Highlights

  • Québec City's stronger economy is expected to stabilize sales of existing condominiums this year and then lift them in 2015, while condominium starts are expected to fall for the second straight year in 2014; lower inventories of unsold new units should bring builders back to the market in 2015.
  • Montréal's condo unit resales are expected to decline in 2014, before bouncing back in 2015, while rising inventories of unsold new condos will slow the pace of construction
  • Ottawa's condo resales are expected to improve in 2015 and continue rising for several years. Meanwhile condo starts will be flat in 2015 and then rise gradually
  • Toronto's condominium market will cool slightly but avoid the collapse many fear due to healthy population growth, a solid economy and the desirability of downtown living
  • Calgary enjoys excellent condo affordability due to its healthy average household income (the highest of all eight cities studied) and relatively modest condo prices.  The city's good economy is boosting near-term resale volumes and price growth while ongoing economic and income growth will maintain Calgary's housing requirements over the following years.
  • Edmonton's strong economy lifted condo sales sharply in 2013 and will keep them growing modestly over the next few years. While condominium starts are forecast to pull back in 2014, following very large jumps in 2012 and 2013, they are expected to grow moderately over the rest of the outlook
  • Vancouver's condominium market is recovering along with the overall resale market, although slowing offshore demand threatens to expose the area's poor housing affordability. Condominium resales will grow modestly throughout the medium-term, as will starts after they stabilize this year.
  • Victoria is expected to see both transactions and prices grow in the resale market over the next few years after enduring several years of decline; meanwhile, falling starts and completions this year will begin trimming new-unit inventories, setting the stage for modest starts growth.

Resale prices for condominiums are expected to rise in both 2014 and 2015 in all eight cities studied. In both years, Calgary will see the largest growth at 6.6 and 3.5 per cent, respectively, and Montreal the lowest at 1.0 and 1.7 per cent.

Median Resale Condo Price by City: Forecast

City

2013

2014f

2015f

Québec City

$225,185

$227,466

$231,909


2.0

1.0

2.0

Montréal

$264,478

$267,109

$271,769


-1.0

1.0

1.7

Ottawa

$259,171

$263,811

$269,852


-4.5

1.8

2.3

Toronto

$308,729

$316,744

$321,540


1.1

2.6

1.5

Calgary

$254,633

$271,463

$280,975


4.2

6.6

3.5

Edmonton

$217,288

$225,212

$232,619


3.2

3.6

3.3

Vancouver

$367,688

$374,051

$383,434


0.4

1.7

2.5

Victoria

$268,321

$279,027

$290,261


-0.1

4.0

4.0



Italics indicate percentage change from previous year.


Sources: The Conference Board of Canada; CMHC

Housing Time Series Database; Canadian Real Estate

Association; Québec Federation of Real Estate Boards.

Average resale prices are used for Québec City and

Montréal; median resale prices are used for the rest of

the metropolitan areas. Resale prices in Montréal and

Québec City cover all condo styles, not just apartments.




The Metropolitan Condo Outlook is commissioned by Genworth Canada from the Conference Board of Canada. The Report reviews a wide range of condominium statistics and offers an in-depth analysis of the trends in the condominium market for eight large Canadian metropolitan areas: Québec City, Montréal, Ottawa, Toronto, Calgary, Edmonton, Vancouver and Victoria. A copy of the report is available at http://genworth.ca/en/about-us/about-us-publications.aspx.

About Genworth Canada
Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada), is the largest private residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For almost two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at June 30, 2014, Genworth Canada had $5.7 billion total assets and $3.3 billion shareholders' equity. Find out more at www.genworth.ca.

SOURCE Genworth Canada

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