A surge in the construction of rental units on the Quebec side of the river fuelled a 63 per cent jump in year-over-year housing starts in Ottawa-Gatineau, the Canada Mortgage and Housing Corp. said Monday.
Homebuilders started work on 720 units in the region last month, compared with 442 in March 2018. While housing starts in Ottawa actually dropped by 28 per cent year-over-year – to 277 from 387 – builders on the other side of the border more than made up for it with a flurry of activity.
Overall March housing starts in Gatineau soared 705 per cent year-over-year, from 55 in 2018 to 443 last month. CMHC said most of that increase came in the multiple-unit category, which includes apartments, condominiums and townhouses, as developers scrambled to address a shortage of rental housing stock.
“The aging of the population and the low vacancy rate have continued to stimulate starts of this type in Gatineau,” the national housing agency said in a news release.
In Ottawa, starts in both the single-detached and multi-unit categories declined more than 25 per cent year-over-year. Single-detached starts dropped from 178 to 132, while the construction of new apartment, condo and townhome units dipped from 209 to 145.
The annual pace of housing starts in the region also slowed in March. CMHC said the seasonally adjusted annual rate of new builds in Ottawa-Gatineau declined 15 per cent to 9,699 in March, compared with 11,372 in February. A 218 per cent gain in Gatineau was offset by a 56 per cent drop on the Ottawa side of the border.
Nationally, the annual pace of housing starts picked up in March after a sharp slowdown the previous month, the agency added.
CMHC said the seasonally adjusted annual rate of housing starts climbed to 192,527 units in March, compared with 166,290 units in February.
Economists on average had expected an annual pace of 196,500, according to Thomson Reuters Eikon.
The reading came as starts of urban multiple-unit projects increased 18.6 per cent to 135,894 units in March.
The rate of single-detached urban starts rose 12.1 per cent to 42,139 units, while rural starts were estimated at a seasonally adjusted annual rate of 14,494 units.
“There's no doubt the Canadian housing market has slowed in the past year, but the latest data on construction suggests the downward trend is stabilizing,” Sal Guatieri, senior economist at BMO Capital Markets, wrote.
“We still see starts hovering around, or even just above, 200,000 this year, marking a small step back from last year while remaining historically high.”
The six-month moving average of the monthly seasonally adjusted annual rate of housing starts was 202,279 in March compared with 202,039 in February.
Rising mortgage rates and tighter lending rules have weighed on home sales in recent months. However, the federal government made changes in the federal budget in an effort to help first-time homebuyers.
The feds are proposing to pick up five per cent of a mortgage on the purchase of an existing home, in exchange for a share of the home's ownership, for households that earn under $120,000 and have been approved for a mortgage no more than four times their income – or 10 per cent, if the house is new.
The amount first-time buyers, and a few others in special circumstances, are allowed to borrow from an RRSP account to buy a home was also increased to $35,000 from $25,000.
However, a poll done for the Royal Bank found that 56 per cent of Canadians think it's better to wait until next year to purchase a home, and 45 per cent of those who said they would wait until next year are prepared to push the purchase out two years or more.
The report found that 47 per cent of prospective homebuyers said they planned to put more than 15 per cent down on their purchase, up 10 percentage points from 2018.
The bank's annual home ownership poll was conducted by Ipsos from Jan. 9 to Jan. 21 and Feb. 14 and 15 and included 2,223 Canadians who completed their surveys online.
– With files from the Canadian Press