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Home Starts Expected to be Second Strongest in 14 Years, Renovation Spending to Hit New Records

OTTAWA, Ontario, August 13, 2003 — Housing starts are expected to reach 203,200 units this year, the second highest housing starts level in 14 years and renovation spending will rise to $32.1 billion, according to Canada Mortgage and Housing Corporation's (CMHC) third quarter CMHC Housing Outlook, National Edition report.

"Another solid year for home construction is expected for 2003 but the pace of new construction will ease over the remainder of the year," said Bob Dugan, Chief Economist at CMHC. "Greater availability of existing homes on the resale market along with slightly higher mortgage rates will lead to a further reduction in new home construction in 2004 when starts are expected to reach just over 188,000 units."

"While low interest rates and strong employment growth have supported strong demand for housing, sales of existing homes will fall slightly short of last year's record pace reflecting slower economic growth. Increases in the average resale price of homes will continue to outpace the general rate of inflation. However, as sales edge lower relative to the supply of new listings coming on the market, growth in house prices will moderate from the 2002 pace. The average price of existing homes will increase by 7.4 per cent this year and 4.4 per cent in 2004."

"On the renovation front, active existing home markets and more disposable income mean an increase in renovation spending which will rise from $29.8 billion last year to record levels of $32.1 billion in 2003 and $33.5 billion in 2004. British Columbia and Quebec will lead the growth in renovation spending throughout this year, and well into 2004," added Dugan.

Housing starts in British Columbia will rise again this year as home market conditions improve, and will continue in 2004 with the province expected to have the highest percentage growth in housing starts nationally in 2003-2004.

Residential construction peaked last year in Ontario. Though lower, home starts will remain robust this year and next because of low inventories of newly completed and unoccupied homes, employment gains and low mortgage rates. Multiple family home starts will be strong this year, especially condominiums in the increasingly expensive home markets such as Toronto. Lower but solid migration will nudge starts down in 2004.

Quebec's housing starts will peak this year, as high consumer confidence, continued strength in the labour market and rising disposable income boosts demand for new homes. Home construction will be slightly lower in 2004.

In the Prairies, lower in-migration will cause starts to decline this year after solid growth in 2002. Fewer starts will continue into 2004 in Saskatchewan and Alberta. Manitoba starts will remain stable.

Following large gains in much of the Atlantic region over the past two years, soft labour market conditions will slow the housing demand and starts will begin to slow this year and in 2004.

Information on this release:

Bob Dugan
Tel.: (613) 748-4009B

National Housing Outlook

Key Housing Market Indicators
Total housing starts (units) 205,034 *203,200 *188,200
Total single-detached houses 125,374 *119,000 *111,900
Total multiple housing units 79,660 *84,200 *76,400
Total MLS® sales** 420,676 *394,700 *378,200
Average MLS® selling price ($)** 188,168 *202,000 *210,800

Provincial Housing Outlook

Total Housing Starts
Newfoundland and Labrador 2,419 2,100 2,000
Prince Edward Island 775 700 610
Nova Scotia 4,970 4,225 4,100
New Brunswick 3,862 3,850 3,600
Quebec 42,452 45,500 42,000
Ontario 83,597 81,500 74,000
Manitoba 3,617 3,200 3,200
Saskatchewan 2,963 2,925 2,900
Alberta 38,754 35,100 31,200
British Columbia 21,625 24,050 24,600

SOURCE: CMHC Housing Outlook, National Edition, Third Quarter 2003.
* Rounded off to the nearest hundred.
** The term MLS® stands for Multiple Listing Service and is a registered trademark of the Canadian Real Estate Association (CREA). Data is for 10 provinces.

National Renovation Spending Outlook

Renovation Expenditure Breakdown*
(millions of dollars and annual percentage change)
  2002 2003 F 2004 F
Alterations and Improvements 22,008 23,705 24,808
% 7.1 7.7 4.7
Repairs 7,783 8,351 8,613
% 7.1 7.3 3.1
Total Renovations 29,791 32,056 33,461
% 7.1 7.6 4.4

Source: Statistics Canada, CMHC forecast 2003 and 2004.
(F) Forecast
* Data is for 10 provinces.

News source: Canada Mortgage and Housing Corporation (CMHC)


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