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Tough times likely ahead for homebuyers, builders

WAYNE GLOWACKI / WINNIPEG FREE PRESS FILES

New mortgage rules, a further projected decline in single-family housing starts for 2019 and rising costs are expected to put the squeeze on potential new homebuyers.

Some recent reports and projections for 2019 are forecasting another challenging year ahead for Manitobans who are looking to build or buy a new home.

New mortgage rules, a further projected decline in single-family housing starts for 2019 and rising costs are expected to put the squeeze on potential new homebuyers and raise home prices at an even higher rate here in Manitoba.

Royal LePage’s most recent House Price Survey report indicated the aggregate selling price of a home in Winnipeg jumped 3.3 per cent, up to $309,101, between the third quarter of 2017 to the third quarter of 2018. The report stated when broken out by housing type, the median price of a two-storey home and bungalow rose 5.7 per cent and 1.6 per cent year over year to $337,424 and $293,387, respectively. Meanwhile, the aggregate price of a condominium declined 2.1 per cent year over year, to $240,933.

On Jan. 1, 2018, the Office of the Superintendent of Financial Institutions, Canada’s banking regulator, introduced new rules that established a new minimum qualifying rate — or "stress test" — to all homebuyers, including those with down payments of 20 per cent or more. Previously, this stress test had only applied to mortgages with lower down payments and those with a term of less than five years. The rules effectively reduced the size of the mortgage Canadians were able to take on given a certain down payment and income. Winnipeg’s housing market — both new construction and resale — felt the impact this had on potential homebuyers, especially those looking at buying or building their first home.

According to the Altus Group’s latest Housing Report, demand for new single-family homes in Winnipeg will remain close to 2018 levels but will dip slightly. Altus Group also identifies that at the same time, the demand for apartment and condo housing, especially rental units, is expected to increase in 2019. This is not surprising, as rising costs and more stringent rules make it more difficult for first-time homebuyers to enter the market.

These reports suggest that while Winnipeg will continue to have strong demand for housing in 2018, the new home-building market is expected to continue to cool in 2019. A decline in housing starts will mean a further shrinking of available new housing stock in Manitoba. At the same time, mortgage rules may mean some home buyers will continue having to opt for less expense housing options. As a result, some Manitoba homebuyers may continue to have fewer housing options available to them while housing prices will continue to rise in 2019.

Lanny McInnes is president of the Manitoba Home Builders’ Association.

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