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http://www.thestar.com/business/rea...st_signal_that_housing_market_is_cooling.html
Drop in housing starts latest signal that housing market is cooling
By:Susan PiggBusiness Reporter, Published on Wed May 08 2013
Construction of new houses and condos slumped almost six per cent across Ontario and eight per cent across the GTA in April over March in the face of softening home sales.
The most dramatic downturn has been in the high-rise condo sector, where new construction starts across the GTA were down some 73 per cent in April, to 1,259 new units from the record 4,716 starts a year earlier, according to statistics released by the Canada Mortgage and Housing Corporation Wednesday.
Across the country, starts are now hitting levels of close to 175,000 for this year, but economists expect that number to keep dropping.
“Housing has been a tailwind for the Canadian economy for most of the past decade, now it’s becoming a headwind,†says Sal Guatieri, senior economist with BMO Capital Markets, who expects to see national starts drop to an average of 175,000 new units this year, and decline further to 170,000 in 2014.
That compares to construction starts that have averaged 215,000 new units a year since the recession, far outpacing population growth and family formation requirements of about 185,000 new units, said Guatieri.
“We see this cooling as a very healthy development since there was overbuilding in some segments of the market, like the Toronto condo market, which could have posed a real problem to the economy if it continued.â€
Ontario was on pace in April to record some 55,875 starts this year, down from the 59,422 expected just as of March, according to average seasonally adjusted numbers compiled by CMHC.
Much of the chill came from the GTA where the condo market has cooled considerably since last summer: Although a record 64,800 new high-rise condos, semis and townhomes are currently under construction, developers are holding back on new launches and condos sales across the GTA were down 55 per cent in the first quarter of 2013 compared to a year earlier, according to market research firm Urbanation.
Housing starts in the 416 and 905 regions that CMHC had expected as of March to average 36,788 this year, were down to an expected 33,820 units as of end of April, says CMHC.
“We’re going to see a significant impact as housing starts continue to move downward,†noted economist Will Dunning, who watches the housing market closely on behalf of mortgage brokers, who continue to blame the downturn largely on Ottawa’s imposition of tighter mortgage lending rules.
As of the end of 2013, thanks to a decade-long housing boom, residential construction accounted for 6.9 per cent of Gross Domestic Product, notes Guatieri, well above historic norms of 5.7 per cent.
That’s seen the creation of almost 5,000 new jobs a year across the country, a number that is likely to decline significantly as both sales and starts continue their decline.
Drop in housing starts latest signal that housing market is cooling
By:Susan PiggBusiness Reporter, Published on Wed May 08 2013
Construction of new houses and condos slumped almost six per cent across Ontario and eight per cent across the GTA in April over March in the face of softening home sales.
The most dramatic downturn has been in the high-rise condo sector, where new construction starts across the GTA were down some 73 per cent in April, to 1,259 new units from the record 4,716 starts a year earlier, according to statistics released by the Canada Mortgage and Housing Corporation Wednesday.
Across the country, starts are now hitting levels of close to 175,000 for this year, but economists expect that number to keep dropping.
“Housing has been a tailwind for the Canadian economy for most of the past decade, now it’s becoming a headwind,†says Sal Guatieri, senior economist with BMO Capital Markets, who expects to see national starts drop to an average of 175,000 new units this year, and decline further to 170,000 in 2014.
That compares to construction starts that have averaged 215,000 new units a year since the recession, far outpacing population growth and family formation requirements of about 185,000 new units, said Guatieri.
“We see this cooling as a very healthy development since there was overbuilding in some segments of the market, like the Toronto condo market, which could have posed a real problem to the economy if it continued.â€
Ontario was on pace in April to record some 55,875 starts this year, down from the 59,422 expected just as of March, according to average seasonally adjusted numbers compiled by CMHC.
Much of the chill came from the GTA where the condo market has cooled considerably since last summer: Although a record 64,800 new high-rise condos, semis and townhomes are currently under construction, developers are holding back on new launches and condos sales across the GTA were down 55 per cent in the first quarter of 2013 compared to a year earlier, according to market research firm Urbanation.
Housing starts in the 416 and 905 regions that CMHC had expected as of March to average 36,788 this year, were down to an expected 33,820 units as of end of April, says CMHC.
“We’re going to see a significant impact as housing starts continue to move downward,†noted economist Will Dunning, who watches the housing market closely on behalf of mortgage brokers, who continue to blame the downturn largely on Ottawa’s imposition of tighter mortgage lending rules.
As of the end of 2013, thanks to a decade-long housing boom, residential construction accounted for 6.9 per cent of Gross Domestic Product, notes Guatieri, well above historic norms of 5.7 per cent.
That’s seen the creation of almost 5,000 new jobs a year across the country, a number that is likely to decline significantly as both sales and starts continue their decline.