TORONTO – A new forecast suggests Ontario home prices will rise about four per cent a year through 2016, down from a decade-long annual average of about six per cent.
The forecast by Central 1 Credit Union says higher mortgage rates in the next three years will restrain housing sales but not cause a market correction.
It also predicts the Toronto condo market will slow as builders delay new construction in the face of weaker demand.
Central 1 says the total number of new condos in Toronto in pre-construction, under construction, occupancy and sell-out phases will be about 100,000 units at the end of 2013.
Chief economist Helmut Pastrick says fears of a housing bubble and a price collapse are misplaced and predicts rising population and land supply restrictions will result in Toronto house prices doubling over the next 25 years.
Central 1 also predicts Ontario’s overall rental apartment vacancy will hold steady at 2.6 per cent through 2014, before declining to less than two per cent in 2016.
The forecast says the average price of residential home sales is forecast to rise at four to five per cent annually through 2016 in the Toronto, Northeast and Stratford-Bruce regions.
Average price increases of two to three per cent annually are forecast in the Northwest, London, Windsor-Sarnia, Hamilton-Niagara and Muskoka-Kawarthas regions.
Average price growth of around one per cent annually is forecast for the Kitchener-Waterloo, Ottawa and Kingston-Pembroke regions.
Central 1 expects sales growth through 2016 will be concentrated in Toronto, although sales are also forecast to rise in the Northeast, Windsor-Sarnia and Stratford-Bruce regions.
Sales will remain near 2013 levels in the Ottawa, London and the Northwest regions. Sales are forecast to slow in the Kingston-Pembroke, Hamilton-Niagara, Muskoka-Kawarthas and Kitchener-Waterloo regions.