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Housing starts climb 14% in April PDF Print E-mail
Written by HGO Staff   

OTTAWA (08 May 2012) - Housing starts climbed 14% in April to a seasonally adjusted annual rate of 244,900 units, according to Canada Mortgage & Housing Corporation (CMHC). That's compared to 214,800 units in March and almost entirely driven by condominium construction in eastern cities such as Toronto, Ottawa and Montreal.

"Most of the increase was in the multiples segment. The increase in this segment is partly a reflection of the high level of pre-sales in large multi-unit projects since 2011, which is in line with job gains over the last year," CHMC deputy chief economist Mathieu Laberge said in a statement.

"Looking at single-detached homes, 67,700 such units were started across Canada in April, a rate which is consistent with that of the recent past," he added.

Actual starts climbed to 21,094 units in April, compared to 16,766 in April 2011. However in multiple unit starts, the number jumps from 9,105 units in April 2011 to 13,243 units this year - an uptick of 45.4%.

"This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing Canadian condo craze," Scotia Capital economist Derek Holt said in a note to clients.

The federal housing agency said the seasonally adjusted annual rate of urban starts increased by 18% per cent to 226,200 units in April. However, single family home starts in the country's urban areas only increased by a very modest 0.6% in April to 67,700 units. Meanwhile, multiple urban starts increased by 27.4% to 158,500 units on an annualized basis.

April's seasonally adjusted annual rate of urban starts increased by 56.5% in Québec, by 12.2% in Ontario, by 6.3% in the Prairies and British Columbia, and by 2.6% in Atlantic Canada. In each region, the increase was mainly due to multiple starts, particularly in Québec and Ontario. Meanwhile, single-detached starts decreased in April in all regions, with the exception of Ontario (+7.9%).

Rural starts were estimated at a seasonally adjusted annual rate of 18,700 units in April.

However, observers are cautioning there are signs of a bubble emerging in key markets. Holt point out that Toronto has the largest stock of unsold newly built condo units since the early 1990s.

CMHC estimates that approximately 25% of condominiums in the Greater Toronto Area are sold but sitting vacant - not unlike U.S. cities such as Miami at the height of its collapsed condo bubble in 2007.

Image
Chart courtesy of Canada Mortgage & Housing Corporation.

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