After a boom recorded in 2021, housing starts in the country’s six largest census metropolitan areas (CMAs) fell five in the first half of 2022 and the decrease in apartment construction (-nine per cent) is the main cause of this drop, according to the latest edition of Canada Mortgage and Housing Corporation’s (CMHC) Housing Supply Report, which was released on Tuesday.
The report examines new housing construction trends in Canada’s six largest CMAs of Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montréal. Gains in new housing construction in Toronto, Calgary and Edmonton, were offset by declines in Vancouver, Montreal and Ottawa.
In the first half of 2022, housing starts were mixed across Canada’s largest urban centres. Rental construction was generally resilient, due to strong demand for this type of housing, while developers took a more cautious approach to starting new condominium apartment projects, due to the higher interest-rate environment,” said Francis Cortellino and Eric Bond, Senior Specialists for housing market analysis for CMHC. “Increases in construction costs and materials shortages were also felt across markets, impacting construction times and the affordability of the housing delivered.”
However, also on Tuesday, the CMHC reported the standalone monthly SAAR (seasonally adjusted annual rate) of total housing starts for all areas in Canada was at the highest since November 2021 (305,889 units) last month, with 299,589 units, up 11% from August. The SAAR of total urban starts increased 12 per cent to 276,142 units in September. Multi-unit urban starts increased 16 per cent to 216,549 units, while single-detached urban starts were flat at 59,593 units.
Rural starts were estimated at a seasonally adjusted annual rate of 23,447 units.
“Both the six-month trend and monthly SAAR in housing starts were higher in September compared to August. September’s increase in monthly SAAR housing starts in Canada’s urban areas was driven by higher multi-unit starts. Montreal, Toronto and Vancouver recorded large increases in SAAR multi-unit starts, resulting in the overall increase for Canada. While single-detached units were up 85% in Vancouver, single-detached starts were flat in Toronto and Montreal. Housing starts activity remains elevated in Canada in 2022,” said Bob Dugan, CMHC’s Chief Economist.
The trend in housing starts was 276,682 units in September, up 3% from 267,813 units in August, said the CMHC, adding this trend measure is a six-month moving average of the monthly SAAR of housing starts.
Rishi Sondhi, Economist with TD Economics, said September marked a huge month for homebuilding activity, which will support residential investment and overall economic growth.
“That said, the bulk of the gain was narrowly based in Ontario, which takes some of the shine off the headline.
We doubt that this robust pace can be sustained given declining sales and rising interest rates, although some offset should come from robust population growth. All told, we see starts trending lower, but remaining at healthy levels, through 2023,” said Sondhi.
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
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