After a sluggish May, apartment starts in the capital were back on track in June, according to the latest numbers from the Canada Mortgage and Housing Corporation.
As a result, the CMHC said Thursday overall housing starts in the capital trended at 4,178 compared with 3,842 in May. The trend is a six-month average to account for the possibility of considerable swings in the seasonally adjusted annual rate. For June, the SAAR was 8,866 compared with 3,636 in May.
“The largest increase came for apartment starts, following a near-halt in May, which flattened the downward trend,” CMHC market analyst Anne-Marie Shaker said in a statement, adding that just over 25 per cent of the apartment starts were rentals.
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“Since 2012, the share of rentals in total starts has averaged about 8 per cent, a significant increase from about 2 per cent over the 2003-2011 period. Developers are offering a mix of dwellings on the market catering to different preferences,” she said.
June SAAR rates in Ottawa were up in all dwelling categories except singles, Ms. Shaker said.
Nationally, the pace of new housing starts also picked up in June and came in better than expected, defying a recent trend of disappointing economic news.
CMHC’s seasonally adjusted rate of residential construction starts rose to 202,818 in June, up from 196,981 units in May.
Economists had estimated there would have been a decline in the annualized rate to 190,000, according to Thomson Reuters.
“Amidst a string of weaker-than-expected economic indicators, housing activity is proving to be the bright spot in the second quarter of 2015, providing some offset to what is ostensibly rounding out to be an otherwise disappointing economic backdrop,” Royal Bank economist Laura Cooper wrote in a note after CMHC released its report Thursday.
There has been a string of disappointing economic news in recent weeks including a contraction of the economy in April leading some economists to suggest Canada dipped into recession in the first half of the year.
Speculation has also increased that the Bank of Canada may look to cut its key interest rate next week when it is expected to trim its economic outlook for the year in its monetary policy report.
CMHC said Thursday the increase in starts came as the number of urban multiple-unit projects gained 3.7 per cent, while single-detached urban starts gained 2.0 per cent.
Regionally, the pace of urban starts increased in British Columbia, Quebec, the Prairies and Atlantic Canada, while it slowed in Ontario.
Rural starts were estimated at a seasonally adjusted annual rate of 14,098 units.
“If there’s a recession in Canada, nobody told the housing market,” BMO senior economist Robert Kavcic said.
“Even in Alberta, where the resale market has corrected, new construction activity is holding up reasonably well considering the challenges.”
Meanwhile, Statistics Canada said its new housing price index rose 0.2 per cent in May, following a 0.1 per cent increase in April, as gains in Ontario and Saskatchewan were offset in part by a drop in Quebec.
The combined region of Toronto and Oshawa was the biggest contributor to the increase as builders reported market conditions and higher land development costs as the primary reasons.
Hamilton and Saskatoon both recorded 0.4 per cent price increases in May.
On a year-over-year basis, the index was up 1.2 per cent in May, up slightly from the 1.1 per cent increase in April.
– with files from the Canadian Press
