The Canada Mortgage and Housing Corporation forecasts housing starts will fall in P.E.I. in 2014 and 2015 due to a slowdown in migration and employment growth.
In its Quarterly Housing Market Outlook for Atlantic Canada, the CMHC estimates single starts dropping to 255 units in 2014, before increasing moderately to 260 units in 2015 in Prince Edward Island.
Most of the housing activity is expected to be concentrated in and around Charlottetown.
Multiple starts activity which began to slow in the second half of 2013 are not expected to rise over the forecast period as the market continues to absorb the recent increase in the supply of new units.
Multiple starts will moderate to 270 units in 2014, before declining further to 215 units in 2015. As a result of the elevated supply levels, the vacancy rate is expected to inch upward over the forecast period.
The pullback in migration, negative interprovincial migration and a relatively high unemployment rate will impact housing sales in 2014 and 2015, CMHC notes in its quarterly housing outlook.
“The weakness in sales activity and increased listings resulting from soft demand over the forecast period will impact the level of price growth,’’ CMHC states in the report.
“The average MLS Sales price is expected to decline to $155,500 in 2014 and $155,000 in 2015.
Overall, housing starts in Atlantic Canada are expected to fall just under six per cent in 2014 with a similar decline of nearly six per cent in 2015.
Slowing demand due in part to a moderate outlook for employment will result in fewer housing starts in both 2014 and 2015.
“Multiple-unit starts, including apartments, are forecast to decline 10 per cent in 2014 and 13 per cent in 2015,’’ said Alex MacDonald, regional economist with CMHC’s Atlantic Business Centre.
“Single starts are expected to fall 1.5 per cent in 2014, followed by a modest drop of less than one per cent in 2015.”
“In the existing home market, MLS® sales are forecast to decrease less than two per cent this year and 0.5 per cent next year. The average price of an existing home is forecast to rise 0.6 per cent in 2014 and just over one per cent in 2015,” added MacDonald.
CMHC is Canada’s national housing agency, providing housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.