Condo Markets Still Tracking Soft Landing

Genworth Canada Releases Winter 2014 Metropolitan Condo Outlook

TORONTO, April 2, 2014 /CNW/ - Condominium markets in most cities will avoid price declines in 2014 and 2015, according to the latest Conference Board of Canada condo report released by Genworth Canada.  The Winter 2014 Metropolitan Condo Outlook forecasts that urban centres of higher risk, like Toronto, are expected to see the condominium market cool, but still expect a soft landing. The outlook is generally stronger in Western cities, including Calgary and Edmonton and even the Vancouver market is improving.

"With a variety of price points and central locations, condominiums remain an attractive and affordable option for those who want to be close to all that urban life has to offer, " said Brian Hurley, Chairman and CEO of Genworth Canada.  "For first-time buyers, well-maintained buildings with reasonable maintenance fees provide that balance between responsible debt investment and homeownership."

All eight cities covered in the report, along with Canada as a whole, are forecast to enjoy employment and population growth in 2014 and over the next few years. These gains, along with low mortgage interest rates, continue to underpin housing demand. An aging population and rising housing prices should help ensure that condominiums, popular with both empty-nesters and budget-conscious first-time buyers, capture a larger share of this expanding market.

"Although many commentators view the Canadian condominium market as an overvalued bubble about to burst, we think it is only slightly overheated and enjoys sound economic underpinnings," said Robin Wiebe, Senior Economist at the Centre for Municipal Studies at The Conference Board of Canada.  "As such, markets are likely to cool gently. To potential homebuyers, monthly mortgage payments, rather than house prices, are what matter and these should remain moderate."

Regional Highlights

• Québec City's stronger economy is expected to boost sales of existing condominiums this year and next, but condominium starts are expected to fall for the second straight year in 2014; however, lower inventories should bring builders back to the new market in 2015
• Montréal's decent employment gains should boost resale condominium sales in both 2014 and 2015;  however, condominium starts are forecast to fall for the third year in a row in 2014, as builders trim unsold inventories, but modest success here will boost starts in 2015
• Ottawa resale condominium sales are expected to grow modestly this year, despite public sector job cuts, but condominium starts are forecast to fall significantly over 2014 and 2015 as builders try to trim record inventories of completed but unoccupied units
• Toronto condominium resale transactions are forecast to remain flat in 2014 then rise modestly; while condominium starts fell over 40 per cent last year as builders faced higher inventories, stronger absorptions will lift starts both in 2014 and 2015
• Calgary's buoyant economy, healthy population growth and excellent affordability will keep sales of existing condominiums rising over the next few years; good demand will also lift condominium starts following a pullback in 2013 that was at least partly due to flooding
• Edmonton's positive economics and demographics are expected to help existing condominium sales rise moderately over the medium term with healthy demand also bolstering the new construction market; however, condominium starts are forecast to drop in 2014 following outsized increases in 2012 and 2013
• Vancouver's persistent modest economic and employment growth should buoy activity in both the new and resale condominium markets over the next few years, but this market is challenged by affordability and exposure to offshore demand which remain important forecast risks
• Victoria's condominium market remains soft due to weak employment, high price points and supply overhangs in both the new and resale markets; the next few years should see slight improvement, but existing unit sales, price growth and starts will all significantly trail the peak levels reached during the last decade's pre-recession boom

Resale prices for condominiums are expected to rise in both 2014 and 2015 in all eight cities studied. For 2014, Calgary will see the largest growth at 3.3 per cent and Vancouver the slowest at 1.5 per cent.

Median Resale Condo Price by City: Forecast

City	2013	2014f	2015f
Québec City	225,341	228,948	236,009
	2.0	1.6	3.1
Montréal	263,884	269,161	278,382
	-1.2	2.0	3.4
Ottawa	261,483	266,640	273,626
	-3.6	2.0	2.6
Toronto	308,387	313,751	319,108
	1.0	1.7	1.7
Calgary	252,473	260,523	269,508
	3.3	3.2	3.4
Edmonton	217,424	222,943	229,435
	3.3	2.5	2.9
Vancouver	367,112	372,734	382,479
	0.2	1.5	2.6
Victoria	269,032	277,072	288,072
	0.1	3.0	4.0

Italics indicate percentage change from previous year.
Sources: The Conference Board of Canada; CMHC Housing Time Series Database; Canadian Real Estate Association; Québec Federation of Real Estate Boards. Average resale prices are used for Québec City and Montréal; median resale prices are used for the rest of the metropolitan areas. Resale prices in Montréal and Québec City cover all condo styles, not just apartments.

Produced twice a year, the Metropolitan Condo Outlook is commissioned by Genworth Canada from the Conference Board of Canada. The Report reviews a wide range of condominium statistics and offers an in-depth analysis of the trends in the condominium market for eight large Canadian metropolitan areas: Québec City, Montréal, Ottawa, Toronto, Calgary, Edmonton, Vancouver and Victoria. A copy of the report is available at http://genworth.ca/en/about-us/housing-reports.aspx.

About Genworth Canada
Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada), is the largest private residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For almost two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at December 31, 2013, Genworth Canada had $5.7 billion total assets and $3.1 billion shareholders' equity. Find out more at www.genworth.ca.

SOURCE: Genworth Canada

For additional information or to arrange interviews, please contact: Lisa Azzuolo, Director, Communications, Genworth Canada, 905.287.5520 or [email protected]