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Home building in Canada to fall over next two years because of weak economy and oversupply

Canadian housing starts will decline in the next two years on a weaker economy and with builders seeking to avoid oversupply, the federal housing agency said.

The pace of work on new homes will fall to 178,150 units in 2016 from 186,900 this year, Canada Mortgage & Housing Corp. said Monday from Ottawa, and again to 173,650 units in 2017.

The forecast reflects the struggles of commodity-producing regions such as Alberta and concerns about rapid construction in Vancouver and Toronto that have drawn warnings about a crash. CMHC reiterated Monday there is a “modest” overvalution of prices, and high consumer debt leaves the market vulnerable to a spike in unemployment.

Price gains will be lower in the next two years from the 2015 increase of 7.2 per cent to $437,700, CMHC said. The increases will be 1.3 per cent in 2016 and 1.4 per cent in 2017.

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