Were Canadian Housing Starts Stable in June 2018?
by Kelly Roche on July 10, 2018
The numbers are in.
“The national trend in housing starts increased in June, reflecting a jump in the SAAR of multi-unit dwellings in urban centres in June to a historical high,” said Bob Dugan, CMHC’s chief economist. “Notably, the national inventory of newly completed and unabsorbed multi-unit dwellings has remained below its 10-year historical average so far in 2018, indicating that demand for this type of unit has absorbed increased supply.”
Here are the monthly highlights:
TorontoPrimarily led by apartment starts, the total number of housing starts in the Toronto CMA trended up to reach a near two year high in June. Driven by condominium apartment starts which recorded a 30 year high for the month. The majority of these apartment starts were spread evenly across the City of Toronto, Mississauga, and Vaughan, highlighting the broad spread of high rise construction in the Toronto CMA.HamiltonApartment starts increased in June, causing overall housing starts to trend up. Apartment starts have reached a very high level in Hamilton due to strong demand from first-time buyers, downsizers, and rental property investors. Faced with fewer options in the resale market at their price point, more first-time buyers and downsizers have purchased new condominium apartments. Rental property investors are looking to take advantage of the extremely low vacancy rates in the region.
Total housing starts in the St. Catharines CMA trended slightly lower in June. Nevertheless, they were nearly 50 per cent above the 10 year average. The mild slowdown was generated by the single-detached sector, while all multi-family housing types saw increases this month. Stronger migration flows from other parts of Ontario continue to fuel demand for new homes in the area.
Kitchener-Cambridge-WaterlooTotal housing starts trended upwards in the Kitchener-Cambridge-Waterloo CMA for the first time in the past five months. While row starts continued trending downwards, marginal increase in single-detached starts was able to pull total starts higher. The slight pickup in full-time employment and tightening resale market conditions during late 2017 supported spillover demand for single-detached units from the resale market to the new construction market.
KingstonHousing starts in Kingston trended higher in June as more multi-unit housing starts, including starts of rental apartments, got underway. Builders have started rental projects in four out of the last six months reflecting a very low vacancy rate, which stood at 0.7 per cent in fall 2017, the lowest among 16 Ontario CMAs.
VancouverHousing starts trended lower in June 2018 as fewer multi-family projects got underway during the month. For the first half of 2018, total housing starts matched the level of activity in the same period in 2017. Particularly high home prices and strong demand from a growing population so far in 2018 have incentivized some new supply, maintaining an elevated pace of new home construction in the Vancouver Census Metropolitan Area (CMA).
VictoriaMetro Victoria housing starts reached mid-year 45 per cent ahead of 2017 levels, driven by substantially higher multi starts. Rental starts were double the rate seen in the first half of 2017 in response to low vacancy rates. Elsewhere, relatively more affordable housing types dominated construction. Condo construction was nearly 60 per cent higher due to the relative affordability of condos over single detached units, which were down 15 per cent. The generally lower average prices in Langford coincided with 44 per cent of all construction in the metro area. Ground-oriented, freehold multi-unit construction was also up 41 per cent, pointing to densification.
CalgaryJune housing starts were down in Calgary year-over-year, but year-to-date (YTD) there has been 8 per cent growth over 2017. Single-detached units were on par with the previous year, while there were roughly half as many rental units initiated. The growth in total housing starts has been driven by the condo market. Condo starts grew 36 per cent YTD over 2017.
WinnipegThe trend measure of housing starts declined further in June after the pace of both single-detached and multi-family starts slowed from the previous month. Following a strong performance in 2017, total housing starts in the Winnipeg CMA continued to moderate during the first half of 2018, down 32 per cent from a year earlier. The decline was most pronounced in the multiples sector where production through June 2018 declined by 38% from the same period of 2017.
QuebecFor the first six months of the year, the relatively strong rate of residential construction in Quebec is attributable to the apartment market segment, including rental and condominium. Favourable economic conditions, decreasing supply in the resale market and population aging have all contributed to increased housing starts.
HalifaxAfter a slow start to 2018, multiples construction in Halifax picked up pace in June, the strongest month so far this year. While levels of construction remain strong on the Halifax Peninsula, the majority of new apartments starts this year have been located in the suburban market. Construction on the single-detached market remains elevated, recording a year-to-date growth of 10 per cent compared to the same period last year.
CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.
The standalone monthly SAAR of housing starts for all areas in Canada was 248,138 units in June, up from 193,902 units in May. The SAAR of urban starts increased by 29.9% in June to 228,844 units. Multiple urban starts increased by 46.4% to 172,845 units in June while single-detached urban starts decreased by 3.5% to 55,999 units.
Rural starts were estimated at a seasonally adjusted annual rate of 19,294 units.