Toronto condo construction takes a breather as sales pick up steam
By Newinhomes on Jun 11, 2019
New home sales may be picking up steam this spring, but residential construction slowed down slightly across the country.
According to the Canada Mortgage and Housing Corporation, housing starts trended down in May 2019 with 201,983 units, compared to 205,717 in April. The trend is a six-month moving average of seasonally adjusted annual rates (SAAR).
The standalone SAAR of urban starts fell 14.4% in May down to 186,946 units, with multi-unit starts down 18.5% to 141,851, and detached starts up 1.8% with 45,095. Rural starts are estimated at 15,391 units.
"The national trend in housing starts decreased in May as a result of continuing decline in the trend for single starts as well as a decline in the trend of multi-unit starts that follows gains in this segment in recent months, in urban areas," says Bob Dugan, CMHC's chief economist. "The decrease in the trend of multi-unit starts reflects a decline in the SAAR level of multi-unit activity in May from the unusually elevated level registered in April, which leaves multi-unit SAAR starts closer to its 10-year average."
In Toronto, starts for all housing types trended downward. High prices continue to put pressure on detached and townhome sales. While multi-unit starts in Toronto took a breather last month, CMHC points out that there is plenty in the pipeline due to a strong couple years of sales.
Brantford was another area highlighted by CMHC with a downward trend in housing starts, mostly due to fewer detached homes and townhomes. Though there were fewer townhome starts, the trend is still higher than usual because the high prices in the detached home market are pushing buyers to smaller, more affordable options.
It’s a different story in St. Catharines-Niagara where housing starts trended up, nearing a 30-year high, mostly due to townhome construction, which made up 40% of the new homes under construction in May. The St. Catharines-Niagara area continues to be a go-to region for buyers in more expensive, neighbouring cities seeking more square footage for their money.
Ottawa’s housing starts also trended up, mostly because of townhome starts. Year-to-date actual starts are 14.4% higher compared to the same period last year. The spike in construction is due to the condo market, while detached home starts trended lower. According to CMHC, the tight resale market has pushed many buyers to the new condo market.
With news that new home sales are spiking this spring, compared to spring 2018, we expect housing starts in the Greater Toronto Area to see a little bump in the near future.
