Ottawa home construction drops sharply; singles still in demand

OTTAWA — Housing starts in the capital plunged in November as builders scaled back from the frenzied pace they had set over the past two years, according to Canada Mortgage and Housing Corp.

The housing market watcher said the number of homes started in Ottawa in November fell to 553, a 40.4-per-cent drop from the 928 starts recorded in November 2010. CMHC had been warning that builders would begin scaling back in late 2011 as consumer confidence slumps and demand for new homes begins to taper.

Despite the drop in overall home starts, single family homes remained in demand.

“Builders have responded to the recent surge in demand at sales offices by breaking ground on 289 new single-detached homes. This way singles posted the best month in two years and surpassed all other dwellings combined,” said Sandra Pérez Torres, senior market analyst at CMHC.

However, the pace of construction for high-density multiple dwelling units, including condominiums, dropped off in November. High-density units have been responsible for much of the growth in Ottawa’s housing sector in 2011 because they are particularly attractive to first-time buyers and baby boomers.

Construction on multiple family dwelling units dropped to 264 units, a 60-per-cent decline compared to the 660 started during the same month last year.

Overall the pace of construction in Ottawa in 2011 is lagging about 11.4 per cent behind 2010, according to CMHC. Builders have started construction on 5,231 homes during the first 11 months of 2011. During the same time frame in 2010, builders began construction on 5,904 homes.

Nationally, the trend was similar.

Canadian housing starts fell in November as construction of multiple-unit buildings declined.

The seasonally adjusted annual rate of starts was 181,100 units last month, down from 208,800 units in October. Economists had expected activity to ease to 200,000 unit in November.

“Housing starts declined in November, reaching a level which is more consistent with the rate of household formation,” said Mathieu Laberge, CMHC’s deputy chief economist. “The decrease in housing starts was due to a moderation in the multiples segment.”

The seasonally adjusted annual rate of urban construction fell 14.4 per cent to 158,900 units in November, CMHC said. Single-unit activity rose 3.5 per cent to 63,600 units, while multiple-unit starts dropped 23.3 per cent to 95,300 units.

Urban housing starts were down 30.6 per cent in Ontario, 13.4 per cent in the Prairies and 3.6 per cent in British Columbia, the federal housing agency said. However, urban starts were up 8.3 per cent in Atlantic Canada and 3.2 per cent in Quebec.

Rural starts, on a seasonally adjusted annual basis, totalled 22,200 units in November, down from 23,100 units the previous month.

In a separate report Thursday, Statistics Canada said new home prices rose 0.2 per cent in October, following a similar increase the previous month.

The major contributors to the October increase were the metropolitan regions of Toronto and Oshawa, and Edmonton, while the biggest declines were in Victoria and Saskatoon.