Local homebuilders started the new year with a bang, driven by new condo construction, according to the Canada Mortgage and Housing Corp.
The national housing agency said developers broke ground on 561 new homes last month, a 63 per cent jump over January 2016 and a three-month high.
The increase was driven by new condos, although levels remain some 60 per cent off the peak reached in January 2014, Anne-Marie Shaker, the CMHC’s senior market analyst for Ottawa, said in a statement.
She added that condo builders may be spurred on by strong local employment, but said condo developers should still show caution.
“Builders will need to monitor the high level of apartment inventories when considering launching new projects in the future,” Ms. Shaker said.
While the city’s glut of unsold condos is easing, several experts told OBJ late last year that they are not expecting a large uptick in the market in 2017.
In addition to reporting actual housing starts, 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 6,565 units in January, compared with 5,991 units in December.
Last year, housing starts in Ottawa were up 6.5 per cent to 5,298 new homes, but that was below levels recorded over the past decade.
Nationally, the pace of housing starts across Canada picked up in January compared with December, fuelled by multi-unit projects such as condominiums and apartments.
The seasonally adjusted annual rate of housing starts was 207,408 units in January, up from 206,305 in December, the CMHC said.
Economists had expected the annual rate to come in at 200,000, according to Thomson Reuters.
January's stronger-than-expected housing starts follow a year that saw a record number of Canadian home resales, noted Royal Bank senior economist Nathan Janzen.
“The recent strength in housing starts has been largely concentrated in Ontario, where resale markets have also been the hottest in recent months (and January temperatures were warmer than usual),” Janzen wrote in a report.
However, Janzen expects the pace of housing starts will slow as the year progresses.
The increase in overall home starts in January came as an increase in multiple-dwelling projects offset a decline in single-detached construction.
The rate of multiple urban starts increased by 4.2 per cent to 125,886 on a seasonally adjusted basis in January, while the rate of single-detached urban starts fell 4.6 per cent to 63,802 units.
Rural starts were estimated at a seasonally adjusted annual rate of 17,720 units.
CMHC said the six-month moving average of the monthly seasonally adjusted annual rate was 199,834 units in January compared with 197,881 in December.
Regionally, the annual rate of urban starts increased in Ontario and Atlantic Canada, but fell in British Columbia, the Prairies and Quebec.
The annual rate for urban centres in Ontario came in at 96,883 units, up from 77,474 in December. The pace of urban starts in B.C. fell to 26,308 compared with 39,011 in December.
– With reporting by the Canadian Press