Local homebuilders had their busiest year in more than a decade in 2017, thanks in large part to a surge in new apartment and condominium construction, the Canada Mortgage and Housing Corp. said Tuesday.
Developers launched 7,457 housing starts last year, the highest number since at least 2004, according to CMHC records.
That’s up nearly nearly 41 per cent over last year.
Industry watchers had predicted a rebound in housing starts in 2017 following several years of declines. When the Conservative government announced plans to reduce government spending, local consumer confidence took a hit as many residents put off major purchases such as a home.
Broken down by segment, starts of single-detached houses were up 15 per cent in 2017, year-over-year, while units in multi-residential buildings were up 56 per cent.
Nationally, housing starts in Canada hit their highest total in a decade in 2017 but are expected to slow this year, economists said.
BMO senior economist Robert Kavcic said the full-year tally of housing starts for 2017 came in at 221,000.
“Canadian homebuilding activity had its best year in a decade in 2017, backed by underlying demographic support and strengthening labour markets in the country's largest provinces,” he wrote in a report.
However, he noted that this year the number of starts is expected to moderate closer to the 200,000 level, with a record number of units under construction to start the year.
CMHC said the seasonally adjusted annual rate of housing starts for December 2017 came in at 216,980 units, down from 251,675 units in November. The six-month moving average for December was 226,777 compared with 226,178 in November.
The housing agency said the overall decline in the annual pace of housing starts in December came as the pace of urban starts fell 15.1 per cent to 198,132 units for the final month of last year.
The pace of multi-unit urban starts slowed 22 per cent to 135,176, while the rate of single-detached urban starts increased by 4.7 per cent to 62,956 units.
Rural starts were estimated at a seasonally adjusted annual rate of 18,848 units.
The housing market has been identified as a key risk to the economy and has been scrutinized by economists and policy-makers.
Rising interest rates and more stringent lending rules are expected to weigh on the market this year.
Royal Bank assistant chief economist Paul Ferley said the total number of starts for 2017 was up 11.4 per cent from 198,000 in 2016.
“Looking ahead, our expectation is that recent tightening of mortgage lending, further official interest rate increases in both Canada and the U.S. and current poor affordability in a number of key markets will contribute to housing starts continuing to trend lower.
“Our forecast assumes that starts will drop to 195,000 this year and 185,000 in 2019.”
– With reporting by the Canadian Press