New home starts increasing in Toronto due to limited resale supply
By Lucas on Jul 11, 2016
The Canada Mortgage and Housing Corporation (CMHC) released its monthly housing starts report for June 2016, announcing an increase in new home starts across Canada.
The trend measure for last June was 197,918 units, which is a slight increase compared to the 190,302 in May. The trend is a six month moving average of seasonally adjusted annual rates (SAAR).
“Overall, June saw housing starts pick up pace in Canada, bolstered by apartment construction in Ontario – especially new condo construction in Toronto’s downtown core,” says Bob Dugan, CMHC Chief Economist. “However, elsewhere in the country, construction activity slowed as apartment construction eased in Quebec. Housing starts are also trending down in Alberta as a result of high inventories in the new and existing home markets of that province.”
The standalone monthly SAAR went up to 218,333 units, a significant increase compared to 186,709 in May. The SAAR of urban starts went up by 18.1% to 202,702 units. Multiple urban starts jumped by 26.7% to 142,819 units, and single detached starts stayed steady, increasing by 1.7% to 59,883.
British Columbia, Ontario, and the Prairies saw increases in housing starts, while Atlantic Canada and Quebec experienced decreases. CMHC estimates rural starts to be around 15,631 units last month.
Housing starts in Toronto CMA
After a month of slow housing starts in May, Toronto Census Metropolitan Area (CMA) is back on track, mostly thanks to the large amount of apartment starts. Housing starts in Toronto CMA trended at 40,861 units last month, compared to 37,377 in May.
“As apartment construction picked up pace in June, so too did overall housing starts in Toronto,” says Dana Senagama, CMHC’s Principal Market Analyst for the GTA. “New home starts also remain strong due to limited supply in the resale market, pushing buyers to purchase from the new market.”
The resale market across the Greater Toronto Area (GTA) has seen a drop in listings and there are no signs of things picking up steam. But, the new low-rise market has also hit record lows in inventory, so many buyers seems to be turning to the new high-rise market to make their home purchase.
The standalone monthly SAAR was 45,848 units, which is much higher than the 33,185 that we saw in May. The City of Toronto had the most starts, mostly apartments, and Brampton and Vaughan followed with many single detached and row home starts.
Will we see apartment starts continue to rise as the low-rise inventory in both the new and resale markets continues to drop? Will the traditionally busy fall season bring enough inventory to market to cool low-rise prices? Stay tuned!
