Greater Sudbury's housing construction market has recovered since taking a serious dip in 2015, but the market overall remains sluggish.
That's the conclusion of the Canadian Mortgage and Housing Corp. (CHMC) annual outlook for the city released this week.
Since dropping to just 152 starts in 2015 (the worst since 1999), the CMHC expects starts in 2017 to settle in between 255 and 285. One factor holding back the market is a supply of unsold new houses, the report said.
“The inventory of newly completed and unsold units is a bellwether of weaker single-detached starts,” the report said. “The 20-unit monthly average witnessed thus far in 2016 has not been seen since 2009 and is indicative of consumers not being as interested in new single-detached product.”
Sluggish demand is also attributed to shaky consumer confidence, partially driven by lower nickel and other commodity prices, and the fact people are moving away to find work.
“Weak employment fundamentals have led to net outflows of people to other provinces and other cities and towns in Ontario while international migration to
Sudbury has been modest, at best,” the report said. “Furthermore, in the resale market, buyer’s market conditions, as evidenced by a weaker sales-to-new-listings ratio, have also explained some of the single-detached construction weakness.”
With an aging population, and the lowest per capita rate of condo ownership in Canada, growth in apartment and condo construction has been a bright spot.
“While new condominium units have begun to emerge in the market, softer resale market conditions are providing increased choice at more reasonable price points,” the report said. “Nonetheless, multi-unit housing starts should grow in 2017 to range between 130 and 150 units and again, in 2018.”
Other highlights from the report include a $250,200-$253,800 average resale price for existing homes, and the expectation that prices will not increase faster than incomes.
“(So) housing market conditions continue to favour buyers,” the report said. “With slowly rising carrying costs, affordability will erode slightly and buyers may be looking for more modestly priced homes, especially given a weaker economic backdrop.”
Sudbury's vacancy rate for rental units will increase to 4.0 per cent in 2016, as the supply of rental housing will increase more than rental demand.
“The Sudbury vacancy rate will therefore rise again slightly to 4.2 per cent in 2017,” the report said. “Rental completions will be lower in 2018, but weaker demand will translate into a further slight increase in the vacancy rate in the autumn of that year.
Highlights:
- Total housing starts will lie within the 265 to 325 unit range in 2017.
- Total housing starts should rise again in 2018 to range between 270 and
- 350 units on the strength of multi-unit demand.
- Resale home demand will grow modestly, ranging between 2,350 and 2,450
- in 2017.
- Rental apartment vacancy rate will move higher to 4.0 per cent in 2016 and 4.2 per cent in 2017.
- Employment will decrease only slightly in 2017 after a 2.8 per cent decline in 2016.
