CMHC forecasts rising rents and fewer houses built in city

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This article was published 28/04/2023 (910 days ago), so information in it may no longer be current.

Apartment rent will continue to rise in Winnipeg while the number of houses being built drops, according to a Canada Mortgage and Housing Corp. forecast released Thursday.

“Until interest rates start to decline, this is a trend we expect to see,” said Adebola Omosola, an analyst with the CMHC.

Meantime, the average home price won’t return to pre-pandemic levels, the CMHC predicts.

The average two-bedroom apartment rent this year will likely be $1,410, with vacancy rates plunging from five per cent in 2021 to 2.5 per cent this year, according to CMHC data.

Between 5,000 to 5,900 homes could start to be built this year. Winnipeg saw 5,870 housing starts in 2022 and 5,694 the year prior.

The average home price should be lower than it was last year — hovering from $348,000 to $375,000 — but it won’t fall to pre-pandemic levels.

The CMHC noted the average Winnipeg home in 2020 sold for $317,931. In 2022, it sold for $380,700.

“Across most (Canadian cities), housing resales are down, prices are declining, house starts… are also slowing down,” Omosola said. “That is all related to the high interest rates we have right now.”

The number of homes sold in Winnipeg could range from 12,200 to 13,300 this year, according to CMHC projections. Over the past three years, house sales have not dipped below 13,500.

“Our members are… looking for a period of stability, when it comes to interest rates and any changes to the cost of borrowing,” said Lanny McInnes, president of the Manitoba Home Builders’ Association.

The Bank of Canada hiked its key policy rate 4.25 per cent, to 4.5 per cent, between March 2022 and January 2021. The rate has stayed put since.

Consumer confidence should jump, leading to more home sales, once interest rates decrease, noted Omosola.

Higher interest rates have also made building homes more expensive.

“Being able to develop projects that are actually financially viable is a problem,” she said.

The CMHC projects more sales, more home starts and a higher vacancy rate for apartments — due to new builds — in 2024 and 2025.

It’s banking on interest rates falling, making loans less expensive.

Home prices will likely rise in the coming years, the CMHC report projects. In 2024, an average Winnipeg home might cost $390,000 in a high price scenario; in 2025, it’s projecting the average sale to reach $410,000, also in a high price scenario.

Rentals.ca clocked the average two-bedroom apartment in Winnipeg to cost $1,622 in March, up 14.7 per cent from the year prior and higher than the CMHC’s findings.

A one bedroom came in at $1,317 per month, as of March, up 14.9 per cent from the same time in 2022.

“The rents are low compared to other cities,” noted Paul Danison, content director at Rentals.ca. “The bad news is, rents are going up and will continue to go up.”

gabrielle.piche@winnipegfreepress.com