Construction on new homes is expected to rise in B.C. in 2015 and 2016 as the rest of the nation prepares for a decline in housing starts, according to a report from the Canada Mortgage Housing Corporation (CMHC).
While the sharp fall in oil prices has hurt Alberta, the Crown corporation said in its May 25 study B.C. is expected to benefit from the loonie’s lower value as the U.S. economy picks up and exports south of the border increase. This will give way to more demand for housing on the West Coast at the same time all the other provinces aside from Quebec experience declines, the CMHC said.
“Projected population growth of just over (1%) per year is expected to add to demand for ownership and rental housing. While people moving to B.C. from other countries will be the main source of population growth, people moving to B.C. from other provinces will add to the population as well,” the study said, noting the province added 10,000 people to its population in 2014 as opposed to the outflows experienced the previous two years.
The CMHC estimated B.C. housing starts would rise 1.2% from 2014, ranging between 26,000 and 30,000 units in 2015. In 2016, housing starts are expected to rise 1% from this year’s forecast, ranging between 26,000 and 31,000.
Metro Vancouver is expected to be responsible for the majority of those housing starts, with the CMHC predicting the region would see 18,700 units begin construction in 2015 and 19,200 in 2016.
Meanwhile, the Crown corporation predicted nationwide housing starts would fall 4.1% in 2015 compared with 2014.
It’s expected between 167,000 and 189,000 units will begin construction across Canada in 2015. A dramatic change is not expected in 2016, when CMHC estimated there would be between 163,000 and 191,000 housing starts.
“While the decline in oil prices appears to have reached a floor, the full impact of declining oil prices and continued low interest rates on economic and housing activity remains uncertain,” the report said.
“However, mortgage rates are expected to remain at or near current historic lows over the forecast horizon. This will continue to support housing demand.”
