Homebuilders in the National Capital Region collectively slowed their activity in September, with housing starts down slightly from the same month last year, according to figures released by the Canadian Housing and Mortgage Corp. on Tuesday.
Builders started work on 792 new homes in Ottawa-Gatineau last month, 15 fewer than last year, CMHC reported. The Ottawa-side of the river drove the decline with an 11 per cent year-over-year decrease, while Gatineau saw a 46 per cent overall increase in housing starts.
While Ottawa saw a slight jump in new single-detached housing starts, builders launched only 336 multi-residential projects in September, a drop of 22 per cent from 2017. That compares with a 129 per cent increase in multi-unit starts in Gatineau, where builders began 128 such projects.
The lag in new multi-residential projects comes in part from a perceived oversupply in Ottawa’s condo market, Ottawa Real Estate Board president Ralph Shaw told OBJ earlier this year.
The National Capital Region’s homebuilders fell behind the rest of Ontario and Quebec in September. Housing starts increased 21.3 per cent across Ontario – led by Toronto condos – and Quebec figures were up 15.4 per cent.
Nationally, the annual pace of Canadian housing starts fell to its lowest level in nearly two years in September.
CMHC says the seasonally adjusted annual rate came in at 188,683 units last month, down from 198,843 in August.
Thomson Reuters Eikon says economists had expected an annual rate of 210,000 for September.
September marks the third straight monthly decline.
The slowdown in the pace of housing starts comes amid rising interest rates from the Bank of Canada, and more restrictive mortgage rules.
“The September housing starts report fits with the relative calm and return to normality in sales, market balance and price growth that we are seeing across most of the country this year, in particular Toronto, following speculative excesses in Southern Ontario earlier last year and a moderate correction in response to policy measures earlier this year,” wrote Sal Guatieri, a senior economist with BMO Capital Markets, in a note.
“Demand continues to be supported by the fastest population growth in 27 years and new millennial-led households. A calmer housing market is just what the doctor ordered, and won't discourage the Bank of Canada from raising rates on Oct. 24.”
CMHC says the pace of urban starts fell by 5.9 per cent to 175,653 units. The slowdown was fuelled largely by an 8.9 per cent drop to 122,656 units in urban multiple-unit projects such as condos, apartments and townhouses. Single-detached urban starts increased by two per cent to 52,997.
Rural starts were estimated at a seasonally adjusted annual rate of 13,030 units, while the six-month moving average of the monthly seasonally adjusted annual rates was 207,768 for September, down from 213,966 in August.
British Columbia led the declines with a drop of 43.3 per cent due to stiffer mortgage rules and growing lack of affordability, particularly in the Greater Vancouver area. Alberta also saw a drop of 34.8 per cent, amid a weakening in the oil-producing economies.
– With reporting by Canadian Press