The volume of new residential construction work coming through across Canada is set to ease back in 2013 from a strong base as new work in multi-residential construction drops back to more normal levels, the latest forecast says.
While lower starts will be the norm across most of the country – particularly in the Atlantic region and Quebec – British Columbia is expected to be the standout performer amid strong employment growth there.
And while multi-unit starts are expected to decline, the outlook for detached housing remains stable.
In its latest Housing Market Outlook, the Canada Mortgage and Housing Corporation (CMHC) says it expects the overall number of housing starts throughout the country to reach 213,700 in 2012 on the back of a strong increase in multi-residential starts stemming from a number of large apartment projects.
However, the CMHC expects starts to drop back to 193,600 next year as the apartment building returns to more normal levels following the tightening of financing rules for condominiums, a weakening global economy and other factors.
The CMHC says, however, that the outlook is far from hopeless, with employment growth and net migration to help maintain respectable levels of starts overall.
“A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year,” CMHC deputy chief economist Mathieu Laberge says. “Nevertheless, employment growth and net migration will help support housing starts activity going forward.”
In terms of market segments, CMHC says multi-residential unit starts will moderate following huge volumes of pre-sales in late 2010 and early 2011 which fed through to significant gains in start numbers over the past two years amid tight supply and low vacancy rates in cities such as Toronto, Vancouver and Montreal. However, it expects stable conditions in detached housing starts.
In terms of provincial outlooks, the CMHC says it expects lower start numbers in Quebec, the Atlantic region and most other provinces amid a pull-back in multi-residential starts but higher numbers of commencements in British Columbia as strong economic conditions in that province feed through into greater demand for housing.
