Renewed interest in rental apartments among developers is helping to accelerate the pace of new home construction in the nation’s capital, the country’s housing agency said Tuesday.
The Canada Mortgage Housing and Housing Corp. said Ottawa’s developers collectively started construction on 713 new homes in September, up from 442 a year earlier. Most of September’s new home activity was concentrated within the boundaries of the old City of Ottawa, Vanier and Rockcliffe Park.
“There is renewed growth in rental product as the rental stock is aging,” said Anne-Marie Shaker, CMHC’s senior market analyst for Ottawa, in a statement.
“Builders are looking to diversify the high-rise dwelling mix as there is a high number of unsold condominium units. Builders may also be banking on weaker first-time-buyer homeownership demand, higher immigration levels, and relative affordability of renting vs. owning to support rental demand,” she added.
Homebuilders have launched construction on 3,801 houses, condos and apartments so far this year. That’s a nearly 13-per-cent improvement on the 3,372 new home starts during the same period in 2015.
Analysts have previously predicted that Ottawa’s housing market will gain momentum this year in lockstep with an improving economy and more stability for local civil servants.
In addition to reporting actual housing starts, the CMHC also calculates a seasonally adjusted six-month rolling annualized average to show trends in new home construction.
By this measurement, housing starts in Ottawa were trending at 5,666 units in September, compared to 4,886 units in August.
Nationally, Canadian residential construction was hotter than expected in September as the pace of housing starts picked up nationally, despite a decline in Ontario.
The CMHC said the seasonally adjusted annual rate of starts was 220,617 in September, up from 184,201 units in August.
Economists had expected an annual pace of 190,000 on a seasonally adjusted basis, according to Thomson Reuters.
CMHC said construction of urban multiple-unit dwellings such as townhouses, condominiums and apartments were the main reason for the increase in most regions, particularly Quebec.
The agency said the moving six-month trend also rose to 199,503 units in September, from 196,465 in August.
CIBC economist Nick Exarhos said the September numbers were the strongest in a year, driven by healthy gains in both multiple-unit and single family homes.
“It was a warm September, but a scorcher for housing starts in Canada,” Exarhos wrote in a note to clients.
Toronto was an exception, with the seasonally adjusted rate dropping to 30,232 units from 40,406 units in August - mainly as a result of fewer apartment starts.
Canada's most populous city helped pull down Ontario's overall activity to 67,426 housing starts in September, from 70,262 units in August. Several smaller Ontario cities also recorded but others showed gains.
Quebec saw the largest gain in housing starts last month, due to the development of new rental apartments for seniors. There were also increases in British Columbia, the Prairies and Atlantic Canada.
However TD Bank economist Diana Petramala said she expected the pace of housing construction to ease through the rest of the year.
“For one, the new mortgage and tax regulation introduced by the federal government last week is likely to shave up to 10 per cent off home sales over the remainder of the year, and homebuilding activity will likely follow suit.
“From a regional perspective, most markets are likely to see a moderation in construction activity. In addition, the normalization in housing activity in Vancouver is likely to temper new home construction in the city.”
- With reports from the Canadian Press