Canada will remain ‘robust’

Housing construction edged up 0.4% to 228,343 last year, but higher mortgage costs - reflecting higher home prices - will slow the pace of home building this year by 7.3 per cent to about 211,700 dwellings, according to the Federal Housing Agency...

Still, this year will be the seventh consecutive year in which housing starts exceed 200,000 units, Canada Mortgage and Housing Corp. said.

"Despite some global financial instability with regards to the U.S. housing market, Canada continues to experience robust employment levels, ongoing income gains and low mortgage rates," said agency chief economist Bob Dugan. "However, housing starts are expected to decrease in 2008 mainly due to recent increases in house prices, which will push mortgage carrying costs higher for home buyers."

Existing home sales to fall

Sales of existing home, which rose a strong 7.6% last year to about 520,000, will also decline, it said, projecting a 3.9% drop to 499,650 and a further 2.2% slide in 2009 to 488,300. Prices, meanwhile, will continue to rise but at a much more moderate pace, it said.

The average price of a home rose by 10.6% last year, reflecting continued strong price pressures in Canada's western provinces, it said. However, as most markets become more balanced, the increase in prices is expected to ease to 5.2% in 2008 and 3.8% in 2009.

Provincially, housing construction is forecast to decline in Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Saskatchewan, Alberta and British Columbia but rise in Newfoundland and Labrador, Ontario, and Manitoba.