The international economic downturn has hit the market in condominium construction harder than any other part of the real estate market in Canada. Rural areas have witnessed an increase in house starts, and there has been long-term growth in starts of single family properties, but the scale of construction of apartment dwellings and condos in Canadian cities, such as downtown Toronto condos, has declined.
This decline in building of multiple occupancy buildings has dragged down the overall average for house starts in March, translating in a drop of 1.5% in all kinds of house starts, nationwide. This represented the first instance that there had been a decline in housing starts in 2010. There was an increase of 7.5 percent during January and 6 percent in February. March saw 197,300 home starts, compared with January’s 189,000 and February’s 200,400.
It is in urban areas that the fall in house starts has been most dramatic. Some rural areas have continued to experience an increase in construction, even as the country’s average has fallen over into a decline. House starts in urban parts fell by 4.2% during March, as starts in rural areas increased from 17,600 in February to 22,100. This demonstrates the changes in starts of multiple family dwellings, which are usually constructed within a city or on its outskirts. Single family homes are the preference in rural areas.
There was an increase during March in the amount of starts for single occupancy buildings, of 6.9 percent, while starts of multiple unit dwellings fell by 15.2 percent during the same month. March was the eleventh month in a row that single residence starts had increased, taking them from their lowest level of the economic downturn, in the previous April, to the best they have been over the past four years.
The Toronto area experienced a large reduction in multiple occupancy building projects, with little demand for building new Toronto condominiums and high rises over several months. This decrease was evened out by a rise in starts of single occupancy residences in rows and low rises in the Toronto market, but, indicating the wider snapshot nationwide.
Shaun Hildebrand, the Canada Mortgage and Housing Corporation expert in market analysis for the Toronto segment expressed an opinion that things would change soon. He said that building of condos was likely to increase soon, in response to the increasing demand for affordable accommodation in the area.
The rate of multiple family property construction starts frequently changes quicker than that of single unit building starts, and sees greater ranges of fluctuation. The Canadian condo market is a volatile one, in the opinion of Bob Dugan, who is the head economist at the Canada Mortgage and Housing Corporation Centre for Market Analysis.
There was a decline of 0.5 percent during February in building permit requests, specifically impacting requests for multiple unit buildings, which was an important element in the decrease in construction starts of these properties in March.
