Toronto - A slowing provincial economy will dampen housing demand according to 2009 First Quarter CMHC Housing Market Outlook - Canada Edition1 released today.

Highlights of the Ontario forecast include:
The Ontario economy will contract before gradually recovering in 2010
A US economic downturn will dampen business opportunities for export driven industries this year

Declining employment levels and tight credit conditions will weigh on consumer spending across the province

Ontario resale volumes will slow before rising in 2010 - reaching 144,0001 units this year, down from over 181,000 units in 2008

Slowing demand conditions will dampen home prices and put buyers in the driver’s seat. Home prices will fall by 3.5 per cent this year and by 1 per cent in 2010
Owing to economic uncertainty, Ontario housing starts1 will slow and range between 50,000 and 60,000 units this year before staging modest pickup in 2010
Demand shift to more modestly priced ownership and rental housing will support high density construction activity in Toronto, Ottawa and Barrie.

Urban markets tied to auto production and US trade which include Oshawa, Windsor and St. Catharine’s-Niagara, will see only modest recovery in 2010

Hamilton, Thunder Bay, Ottawa and Kitchener new home markets will enjoy greater starts stability as these centers represent the tightest Ontario resale markets

“Ontario housing starts have been running above demographic trends in recent years. This trend will be reversed in the next few years largely due to a slowing Ontario economy,” said Ted Tsiakopoulos, CMHC’s Ontario regional economist. “Despite the modest economic recovery next year, improved consumer spending and homeownership affordability will add to housing demand in 2010”, added Tsiakopoulos.