Ottawa’s homebuilding industry continued its dramatic recovery in July, with local developers collectively posting a 95 per cent year-over-year increase in housing starts, the Canada Mortgage and Housing Corp. said Wednesday.
The federal agency said homebuilders broke ground on 802 properties, including 214 single-detached houses, last month. That’s up from 411 in July 2016.
The number of housing starts had tapered off as the previous Conservative government attempted to control federal spending, which prompted some residents to hold off on making large purchases such as buying a home.
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But with a change in government, many would-be homeowners are feeling more financially secure. Industry experts say this is leading developers to play catch-up to rising consumer demand.
In the first six months of 2017, housing starts were up 44 per cent over the same period in 2016.
CMHC says home construction activity was driven by the rental apartment market.
“Builders are diversifying high-rise product as a substantial number of completed condominium apartment units remain unsold,” the agency said in a statement. “In addition, an ageing rental stock and robust rental demand are contributing to increased building activity for rental units.”
Several large rental projects are under construction or planned across Ottawa, including Manor Park’s recently released vision for three mixed-use towers on the former Alterna Savings site in west Centretown.
Despite CMHC’s assessment that the local condo market remains oversupplied, other experts say they see signs of a recovery. Last week, the Ottawa Real Estate Board said condo sales are up by nearly a third this year and that more would-be sellers are listing their units as they see the market improving.
Canadian homebuilders ramp up development
Nationally, home construction in Canada picked up last month, driven by British Columbia and Alberta, defying expectations that homebuilding activity would cool down.
The seasonally adjusted annual rate of housing starts rose to 222,324 units in July, up from 212,948 in June, according to CMHC.
The ramp-up likely reflects strong demand for new housing from the end of last year into the start of this year, TD Bank economist Diana Petramala said, adding that the new construction market tends to lag real estate demand, which has started to fall.
Petramala said regulatory changes over the past year, including tougher mortgage qualification rules, have prompted a shift for some first-time homebuyers from existing homes to cheaper, newly built dwellings.
“Some of the momentum could potentially carry forward into the second half of the year before new home construction eases along with the existing home market next year,” she said.
Last month, the Canadian Real Estate Association reported that national home sales figures in June posted their largest monthly drop in seven years. CREA is expected to release July sales data next week.
The annual pace of urban home construction increased by 5.5 per cent last month to 206,122 units, driven by a rise in multiple urban starts – generally apartment buildings, townhouses and condominiums – while single, detached home starts slowed.
Multiple urban starts increased by 10.4 per cent to 141,950 while single-detached urban starts fell by 3.9 per cent to 64,172. Rural starts were estimated at a seasonally adjusted annual rate of 16,202 units.
Regionally, the annual pace of housing starts in B.C. surged 20 per cent compared with June, while Alberta saw an eight per cent increase. The annual pace of starts in Ontario was up one per cent.
“Much of the recent strength has been concentrated in B.C., where starts have rebounded back close to record highs after slowing late last year,” Royal Bank senior economist Nathan Janzen wrote in a report.
The housing start data came as Statistics Canada also reported the value of building permits issued in June rose to $8.1 billion, up 2.5 per cent from May and the second-highest value on record.
The overall increase came despite a 0.9 per cent drop to $5.0 billion in the value of residential building permits in June. The value of permits for single-family dwellings fell 12.5 per cent, while plans for multi-family dwellings rose 12.5 per cent in June to $2.7 billion.
The value of building permits for non-residential structures in June rose 8.8 per cent to $3.0 billion.
– With reporting by the Canadian Press