Construction on new housing will be slashed by at least half this year as prices and sales on existing homes plunge due to the economic shock from the coronavirus pandemic, the Canada Mortgage and Housing Corporation predicted in its housing market outlook released Wednesday.
Housing starts, prices and sales won’t start to recover until mid next year, with levels likely to remain below pre-pandemic levels until 2022, according to the forecast, which is admittedly “a little on the pessimistic side,” CMHC chief economist Bob Dugan said on a conference call with media.
“We don’t expect this to be a very quick recovery from COVID-19,” he said.
The CMHC blamed massive declines in employment — 3 million jobs disappeared across Canada in March and April — along with drops in economic activity due to stay-at-home orders, a halt to immigration and lower oil prices for the additional risks to the housing market.
The CMHC predicts housing prices will fall between 9 and 18 per cent from pre-pandemic levels, with prices falling as much as 25 per cent in oil-producing provinces Alberta and Saskatchewan.
Sales volumes are expected to fall between 19 and 29 per cent as potential buyers stay home instead at a time when social distancing makes it difficult to look at homes and uncertainty makes them more inclined to wait before a big purchase.
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