Multiple pressures are pulling down the rate of new construction in the major markets
Preliminary housing starts data for October 2018 are pointing to a national market that is steadily slowing down due to pressure from various factors, according to the Canada Mortgage and Housing Corporation (CMHC).
“The national trend in housing starts declined for a fourth consecutive month in October, which leaves the trend at its lowest level since February 2017,” CMHC chief economist Bob Dugan stated in the starts report.
“However, despite declining for several months, the trend remains slightly above its long-run average because it follows historically elevated levels of activity in 2017.”
The housing starts trend measure stood at 206,171 units in October 2018, slightly lower than the 207,809 units in September 2018.
Read more: CMHC issues forecast for next two years
Among the biggest markets, Vancouver starts had some of the most notable drops in the volume of housing starts. Preliminary data showed that the city saw a major 49% year-over-year decline last month, with the single-detached sector suffering a 19% shrinkage, and all other asset classes falling by a massive 53%.
“Construction activity for the month was concentrated in the City of Vancouver, which accounted for over half of all starts with several major projects. With the resale home market softening over the course of 2018, new home construction for the year is on track to be slightly below the total for 2017,” the CMHC stated in its report.
Activity in Montreal was mainly focused on retirement and rental property. Overall starts actually fell by 19% in October (15% decline for single-detached, and 19% decline for all other asset classes).
“The aging of the population continues to fuel seniors’ housing construction. The relatively low vacancy rates on the rental market also stimulated the construction of rental units in the metropolitan area.”
In Toronto, multi-family dwellings propelled the market’s total starts volume to 53% year-over-year growth.
“Strong pre-construction sales of more affordable townhomes and condominium apartments over the past two years continue to lead to housing starts in 2018.”
On the other hand, land costs and geographic limits placed a damper on single-detached starts, which fell by 41% to reach its lowest level this year so far, the CMHC stated.
