Ottawa-Gatineau’s apartment-building bonanza continued to drive the local housing construction market in December, with the number of multi-unit starts nearly doubling year-over-year, according to figures from the Canada Mortgage and Housing Corp.
Builders in the region started work on 594 apartments and other multi-residential units last month, up from 298 units a year earlier, CMHC said Thursday. While the number of single-detached starts remained static at 260, the multi-unit boom led to a 53 per cent jump in overall new builds from 854 from 558.
Multi-residential starts in Gatineau – which also include condos, row houses and townhomes – skyrocketed more than 500 per cent year-over-year, rising from 40 in December 2018 to 245 last month as developers rushed to fill demand fuelled by the region’s tight rental market. Builders on the Ottawa side of the river launched 349 new multi-res units, up from 258 a year earlier.
Nationwide, developers started building fewer homes than expected in December, mostly because of a decline in multi-unit projects, CMHC said.
The agency said the seasonally adjusted annual rate of housing starts came in at 197,329 in December, down from 204,320 in November.
Analysts on average had expected an annual rate of 210,000 for December, according to financial markets data firm Refinitiv.
Bob Dugan, CMHC's chief economist, said multi-family starts in Toronto, Montreal and Ottawa were the main drags on starts, but stable activity in Vancouver and significant growth in Calgary helped offset those declines.
Starts in multi-unit dwellings in urban areas fell five per cent from November, including a 17 per cent decline in Ontario, while urban starts of single-detached homes edged up one per cent.
The six-month moving average of the overall monthly seasonally adjusted rate was 212,160 units in December, down from 219,921 in November.
“Housing starts lost a bit of steam toward the end of last year,” said RBC senior economist Josh Nye in a note.
The annualized pace for the fourth quarter as a whole came in at 201,000, compared with 220,000 in the prior two quarters, he noted.
But Nye said starts should be in the middle of the range for the year ahead as the market rebounds, helped in part by Canada's fastest population growth rate since the early 1990s.
“That would be consistent with a resurgent housing market – which we see extending into this year – and strong demographics.”
CIBC senior economist Andrew Grantham said the slowing starts in the fourth quarter contributed to a deceleration in overall economic growth, but that starts should clock in slightly above the 200,000 mark this year.
“We expect that the combination of lower mortgage rates (compared to the start of last year) and solid population growth will support demand for housing in 2020,” he said in a note.
TD economist Rishi Sondhi said the drop in multi-unit starts was likely from past declines in pre-construction condo sales. Sondhi said the effects of past pre-construction sales declines would continue to restrain homebuilding in key markets this year.
– With files from the Canadian Press