Rising employment and earnings led to an uptick in new home construction last year, although housing starts remained below levels recorded over the past decade, according to the Canada Mortgage and Housing Corp.
Developers started work on 5,298 new homes last year, a 6.5-per-cent increase over 2015. However, that’s still below the average of approximately 5,900 housing starts over the preceding seven years, according to OBJ research files.
Housing starts had dipped to their lowest level in at least seven years in 2015 as Ottawa’s sluggish economy and cuts to the federal public service prompted some residents to postpone purchasing a new home.
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That changed last year.
“An improvement in employment and earnings this year has led to a rebound in housing activity on the new home market front,” Anne-Marie Shaker, CMHC’s senior market analyst for Ottawa, said in a statement.
She added that row houses, which have become increasingly popular due to their relative affordability, drove the year-over-year increase.
For the month of December, new home construction picked up steam thanks to a rise in the number of rental units under construction. That more than offset a decline in work on new condos brought about by high inventories of unsold units, CMHC said.
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 5,997 units in December compared with 5,881 units in November.
Nationally, the total number of actual housing starts in Canada in 2016 came in at 197,915, up from 195,535 in 2015.
“We’re looking for a modest cooling of activity over the course of 2017, with a moderation in Vancouver and Toronto expected to dampen the national tally to around 185,000,” Bank of Montreal senior economist Robert Kavcic wrote in a report.
Regionally, the annual pace of urban starts in December increased in Ontario, Quebec and the Prairies, but decreased in British Columbia and Atlantic Canada.
Kavcic said the rebound in Ontario was responsible for much of the national increase in the month, while the decline in B.C. came after a strong gain in the previous month.
“New activity in both of these regions has been see-sawing on a month-to-month basis, but the picture in both is one of elevated activity,” Kavcic noted.
Rural starts in December were estimated at a seasonally adjusted annual rate of 19,420 units.
The six-month moving average of the monthly seasonally adjusted annual rate of housing starts in Canada stood at 198,053 units in December compared with 200,105 in November.
In a separate release, Statistics Canada said municipalities issued $7.8 billion worth of building permits in November, down 0.1 per cent from October.
The value of residential building permits fell 1.6 per cent to $5.1 billion in November, while non-residential building permits climbed three per cent to $2.6 billion.
– With a report by the Canadian Press
