Canadian Home Construction Cooling

14 March 2012 10:00am - Jack Stupple

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Canadian Home Construction Cooling

The Conference Board of Canada has said that new home construction is forecasted to slow over the next two years as the housing market cools.

The report, which kept with recent reports from the Canadian Real Estate Association and the Bank of Nova Scotia, predicts that housing starts will be 190,000 in 2012 and 2013. According to CREA there were 194,000 starts in 2011. Many strategists and economists expect home prices to stall, with a mere 0.1% for this year and 2013.

The report added that the decline in construction is a result of an oversupply of condominiums in some markets where demand was more leaning towards single-family homes. Toronto and Vancouver accounted for nearly 30% of unsold condos over the last six months.

Despite this report, data from the Canada Mortgage and Housing Corp (CMHC) suggested that housing starts rose in February from January as a substantial increase in multi-unit construction in Quebec boosted the national number.

Maxim Armstrong, the Conference Board’s senior economist said, “The industry is coming in for a soft landing.” He added “Slow job growth, still-weak consumer confidence and high household debt loads are slowing demand for new homes.”

According to employment data released earlier this month, the economy unexpectedly lost 2,800 jobs in February despite signals of a strong domestic economy.

“While there may be some concerns about overheating in some segments in a few cities, the overall outlook for the housing market in Canada remains solid,” said Armstrong. Even though there is cooling in starts, the board has said industry profits are expected to rise more than 21% this year to C$3.4 billion as building costs decline.

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Related Links:
• The Conference Board Of Canada
Canada’s Residential Construction Industry
• CMHC
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• Latest News
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• Economic Calendar
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