Winnipeg's robust housing market is about to catch the sniffles, according to Canada Mortgage and Housing Corp.
In its second-quarter housing outlook report released Thursday, the federal housing agency predicts there will be a decline this year in housing starts and sales of existing homes within the Winnipeg Census Metropolitan Area (CMA) and the province.
But it will be more a case of the market catching the sniffles rather than a full-blown cold because the decline in starts will be confined to the multi-family side of the market.
The agency predicts single-detached homes in Winnipeg will continue to be a pillar of strength, with the industry pounding out 80 more new homes than it did in 2007, for a 4.3 per cent increase.
And while there will be fewer existing homes sold -- 12,000 compared with 12,319 last year -- CMHC predicts selling prices will continue to escalate at a record-setting pace. It said the average selling price in Winnipeg is expected to jump by a further 15 per cent to $200,000 by the end of this year.
"That would be the sixth consecutive year of double-digit price increases and be the strongest growth rate on record," said Jeff Powell, CMHC's senior market analyst for Manitoba.
CMHC also predicts this year's declines will be short-lived and that the Winnipeg and Manitoba markets will both rebound in 2009.
"I'd really be loathe to even say it's a (market) slowdown," Powell said. "I think the point I'd want to get across is that even though we've read a lot about how the market has turned (in other parts of the country), that's really not the case in Manitoba."
CMHC predicts new home construction in Canada will slow to 214,650 units this year from 228,343 in 2007, with seven provinces registering declines.
It says sales of existing homes are expected to fall by 8.5 per cent and that the downward trend will continue in 2009, with housing starts dipping to 199,900 and existing home sales crumbling another 2.3 per cent to 465,000 units.
"Most of the pent-up demand that built up during the 1990s has now been fulfilled and residential construction activity will gradually move in line with Canadian demographic fundamentals," said CMHC chief economist Bob Dugan.
"These factors will continue to exert downward pressure on housing starts."
However, Powell said there's been no weakening in demand for housing in the Winnipeg CMA. He said the only reason sales of existing homes are expected to decline this year is because of the severe shortage of new listings.If CMHC's forecast proves to be accurate, this would be the first time since 2000 there's been a decline in housing starts in the Winnipeg CMA, and the first time since 2002 that there's been a decline in the sale of existing homes.
And while CMHC is forecasting a 20 per cent decline in multi-family starts this year, Powell noted 2007 was an exceptionally strong year for multi-family construction in the Winnipeg area.
In a separate report released Thursday, the Bank of Nova Scotia forecasts overall sales nationally will fall 15 per cent below last year's record levels, with home prices increasing on average about five per cent.
"Cracks are appearing on the new-home front as well," the bank said, as demand for new residential building permits has fallen sharply and price increases are moderating as inventories of unsold homes trend higher.
But despite the cooling trend, both reports said Canada's housing market remains healthy and activity this year, while off last year's record levels, will be strong by historical standards.
-- With files from Canwest News Service
murray.mcneill@freepress.mb.ca
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