The Canada Mortgage and Housing Corporation (CMHC) released its housing starts report for December 2017, announcing that new home construction remained stable.
Last month, housing starts trended at 226,777 units, almost unchanged compared to the 226,178 in November 2017. The trend is a six month moving average of seasonally adjusted annual rates (SAAR).
“Despite the variation in activity across the country, the national trend in housing starts held steady at its highest level since 2008,” says Bob Dugan, CMHC’s chief economist. “Total urban housing starts in 2017 were up 6.2% compared to 2016 due to the rise in apartment construction.”
In Toronto Census Metropolitan Area (CMA), the pace of construction through 2017 was steady. For the entire year, there were nearly 39,000 starts, which is 0.6% lower than 2016.
Affordability, tighter mortgage rules, and a better supplied resale market impacted the construction of detached homes. Construction of this housing type dropped 14% year-over-year.
Demand shifted to smaller homes like townhomes and condos. While the new condo market dominated housing starts in Toronto, the final quantity for 2017 was 5% lower than 2016.
CMHC highlighted Belleville because housing starts were the highest since 1990, mostly due to detached homes and apartments. There were 104 starts in December, the highest month since February 2009. 50% of these starts were rental. The demand for rental housing in Belleville is high with the vacancy rate falling 2.2% last year.
While families and young professionals are looking to rent and buy in Toronto and Belleville, the opposite is happening in Sudbury. There were only 10 starts in Sudbury last month, adding up for a total of 195 for the year, which is the lowest number of starts since 2001.
CMHC credits the drop in housing starts to the poor employment prospects, which is causing people aged 15 to 44 to move out of the city. One thing to note is that Sudbury’s resale market is balanced, so less people are considering buying in the new home market.
Ottawa had the highest December since 2009 with a surge in rental apartments. Out of all the apartment starts in 2017, 50% were condos and 50% were rental, and the total doubled 2016’s apartment starts.
In total, there were nearly 7,500 starts in Ottawa, which is the busiest construction has been since 2002. CMHC credits the strong economic fundamentals for attracting families and young professionals.
The standalone SAAR of housing starts for all of Canada in December was 216,980 units, down from 251,675 in November.
The SAAR of urban starts dropped by 15.1% to 198,132 units. Multiple urban starts decreased by a whopping 22% to 135,176 while detached urban starts went up 4.7% to 62,956. Rural starts are estimated at 18,848 units.
With record new condo sales in the Greater Toronto Area (GTA) last year, we expect another strong year of condo construction!