Ottawa’s housing construction pace falls in October amid economic headwinds, labour crunch

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Housing starts in Ottawa-Gatineau rose slightly in October compared with the previous year, the Canada Mortgage and Housing Corp. said Wednesday – but the annual pace of starts fell significantly as builders struggle with issues like rising costs, soaring interest rates and labour shortages.

The national housing agency said work began on 1,707 new residential units in the region last month, up from 1,529 starts in October 2021. Most of the increase resulted from a surge in multi-unit starts in Gatineau, which nearly doubled year-over-year from 253 to 478.

But total starts in Ottawa declined six per cent compared with a year earlier to 1,138, reflecting an overall drop in construction throughout 2022 as the industry grapples with various economic factors that have prompted some developers to press pause on plans for new condos and other housing projects.

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Multi-unit starts such as condos and rental apartments were down 14 per cent in Ottawa last month from a year earlier.

Meanwhile, Ottawa-Gatineau’s seasonally adjusted annual pace of housing starts – a six-month rolling average designed to smooth out monthly fluctuations – was 19,446 in October, a drop of 18 per cent from 23,634 the previous month.

While the pace of housing starts jumped 281 per cent in Gatineau, it fell 41 per cent in Ottawa.

Last month, the executive director of the Greater Ottawa Home Builders Association called the recent housing start figures “very concerning,” saying the industry needs to pick up the pace in order to meet growing demand.

“We need, as a city, to set a housing target, so the City can facilitate the building of the homes. What are we doing, what processes, fees, regulations and policies are in place that are impeding the construction of those homes?” Jason Burggraaf said.

Newly elected mayor Mark Sutcliffe has pledged to cut red tape and make it easier to build new homes as well as offer incentives for builders to construct more affordable housing as part of a push to see 100,000 new dwellings built in Ottawa over the next decade.

In addition to economic factors like inflation and rising interest rates, a labour shortage is also shackling contractors, industry experts told OBJ last month.

“We’re facing retirements and some big projects over the next decade,” said Mary Gauthier, general manager at the Mechanical Contractors Association of Ottawa, referring to upcoming large projects like the new Civic hospital campus. “But right now, too, we need people. The industry in Ottawa is booming, so there is a need to recruit.”

Nationally, CMHC says the annual pace of housing starts slowed in October from its high for the year reached in September.

The national housing agency says the seasonally adjusted annual rate of housing starts in October was 267,055 units, down 11 per cent from 298,811 units in September.

The annual pace of urban starts was down 11 per cent at 245,234 units in October as multi-unit urban starts fell 13 per cent to 188,189 units. Urban starts of single-detached homes dropped four per cent to 57,045 units.

CMHC says the annual pace of starts was down in Toronto and Vancouver, while Montreal posted an increase.

Rural starts were estimated at a seasonally adjusted annual rate of 21,821.

The six-month moving average of the monthly seasonally adjusted annual rate was 277,667 units in October, up 0.5 per cent from 276,374 in September.

– With additional reporting from the Canadian Press

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