Condos boost Ontario housing starts

The number of new housing starts in Canada grew last month on an acceleration of condominium building in Ontario, according to the country’s national housing agency. Canada Mortgage and Housing Corporation says the seasonally adjusted annual rate of housing starts moved up to 211,000 units in August, from 186,500 units in July.

“After a brief pause in July, the volatile multiple segment bounced back to a level of activity that is more consistent with our forecast for this year,” said Bob Dugan, chief economist at CMHC’s market analysis centre. “Most of the volatility in housing starts over the last three months reflected swings in multiple starts in Ontario.”

Multi-unit starts, essentially condos, were up 9.3 per cent year over year in the last three months to 9,465 units from 8,675, but single-family starts were down 23 per cent from last year, to 6,406 units from 8,526.

New housing construction in larger cities jumped 81 per cent in Ontario, but dropped just about everywhere else.

Urban housing starts in the Prairies sagged 22.5 per cent and were down 11.5 per cent in Atlantic Canada. There were smaller declines in Quebec and British Columbia.

“While the decline in single-family starts is discouraging, it’s still not in the same league as the 40-per-cent-plus dive seen south of the border,” said economist Robert Kavcic of BMO Capital Markets.

He noted the trend in Ontario residential construction has turned up since the start of 2008, with average starts over the last year the highest since late 2006 ““ likely thanks to the Toronto condo market.

Meantime, Alberta’s 12-month trend is now at its lowest since mid-2005, while B.C. has lost momentum and Saskatchewan has also slowed down.

“Canadian residential construction activity has held steady since 2003 thanks to strong multiple-unit starts and strength in Western Canada,” Kavcic said.

“However, with that region slowing and other factors ““ job losses, declining confidence ““ pointing to further housing market weakness, expect more downward pressure on housing in the coming quarters.”

TD Bank economist Pascal Gauthier said Ontario’s, and particularly Toronto’s, condo starts “have trended up precisely when Alberta starts started pulling back in the fall of last year, offsetting that decline” in other parts of Canada’s new homebuilding sector.