Canadian real estate markets have been cooling for a while now, but statistics recently published by the Canada Mortgage and Housing Corporation (CMHC) indicate that the number of new constructions being started was on the rise in March 2019.
The number of housing starts in a month is the number of units on which construction was begun in that month. This number is then scaled up, using knowledge of how that month usually performs, to give what is called the seasonally-adjusted annual rate, which is an estimate of how many housing starts there will be in that year.
March 2019 Shows Big Monthly Increase in Starts
In 2019, taking the country as a whole, the seasonally-adjusted annual housing start rates for February and March 2019 were 166,290 and 192,527 respectively. Admittedly, February is typically slow, but these figures represent a healthy month-over-month increase of 15.78%. This annual housing start rate is on a par with the rate that business solution providers Thomson Reuters Eikon had predicted, which was 196,500.
A six-month moving average of the monthly seasonally-adjusted annual rate can give a better idea of broad trends. For March 2019, this figure was 202,279, which was only a small increase on February’s figure of 202,039 but still a sign that the trend is going upwards.
|February 2019||March 2019||March 2019 vs.
|Six-Month Moving Average||202,039||202,279||0.12%|
Urban Multiple-Unit Projects Lead the Way
Broken down by property type, CMHC reported further that in March 2019 new starts of urban multiple-unit projects—that is townhouses, condominiums and apartments combined—rose by 18.6% to 135,894 units. New starts of single-detached urban properties, on the other hand, increased 12.1% to 42,139 units, whereas those in rural areas achieved a seasonally-adjusted total of 14,494 units.
|Seasonally-Adjusted Annual Rates||March 2019|
No. of Units
|March 2019 vs.
|Urban Multiple-Unit Projects||135,894||18.6%|
|Single-Detached Urban Properties||42,139||12.1%|
New Starts in Canada’s Major Cities
The National Bank of Canada (NBC) gives figures for the country’s major cities for March 2019, reporting significantly more new starts in the Montreal real estate market (up 16,400 to 31,300), the Toronto real estate market (up 12,000 to 32,200) and the Halifax real estate market (up 1,400 to 4,400).
As one might have anticipated given the troubled nature of Vancouver real estate right now, the number of new starts decreased there, falling 4,100 to 21,000. The Edmonton real estate and Calgary real estate markets were slightly down in the month, with decreases of 900 to 6,900 and 800 to 6,900 respectively.
|No. of Housing Starts||March 2019||March 2019 vs
New Starts by Province
At the province level, NBC states that urban starts increased dramatically in Quebec (up 22,900 to 56,300) followed by Ontario (up 5,200 to 58,900) but that these figures were partially offset by decreases in British Columbia (down 3,600 to 32,500) and Alberta (down 200 to 17,900).
Toronto-Dominion Bank adds that March 2019 showed month-on-month increases in the Manitoba, Saskatchewan, Nova Scotia and New Brunswick real estate markets, of 300, 300, 1,300 and 100 units, respectively, while there was a drop of 300 units in Prince Edward Island, and in Newfoundland and Labrador no change was recorded.
NBC, while recognizing the surge of new starts in March 2019, is not willing to conclude that this is enough to make it 100% positive about the first quarter of the year. However, Sal Guatieri, senior economist at BMO Capital Markets, states that:
“There’s no doubt the Canadian housing market has slowed in the past year, but the latest data on construction suggests the downward trend is stabilizing.”
It is not certain in which direction the Canadian housing market will go. External factors have been applied to slow its growth, then federal budget provisions were enacted to help first-time homebuyers in an attempt to stimulate the market, and external measures can always be applied again.
The property markets of Vancouver and other British Colombia locations are still genuinely a concern, but other markets are compensating for these. All in all, the increasing willingness of constructors across the country to invest right now may bode well for a stable Canadian real estate sector.