The housing market continues to see the effect of tightening mortgage rules, as CMHC reported early in the week that housing starts have been down in November, compared to the month before. In October Canada saw a total of 203,487 starts across the country; but that number dropped to 196,125 in November. The reason? Builders and developers are simply constructing less as demand drops. And a huge plunge in starts in the provinces of Ontario and B.C. didn’t help.
Derek Holt, economist with Scotia Capital, indicated that this number of starts is the lowest the country has seen in the past year.
“Total housing starts are now 14 per cent lower than the recent peak in August, and 22 per cent lower than the distorted post-crisis peak in April of this year,” he says. “Housing will be a drag on Q4 GDP in a theme that we expect to persist into next year.”
But does that mean that we should be worried? Is our housing market on a downward slide; and if so, should we be concerned that the bubble is bursting?
Robert Kavcic of BMO Capital Markets doesn’t think so. “Residential construction is acting as a drag on Canadian growth,” he says. “But at this point, the landing in the sector still looks soft.”
That’s despite some pretty extreme numbers. Ontario and British Columbia are taking most of the heat, due to a drop of 14.3 per cent and 16.5 per cent, respectively. But these two provinces actually weren’t the ones to see the biggest slowdown in their housing starts. Atlantic Canada stakes that claim with a drop of 45.6 per cent in housing starts. This is mainly due to the number of condominiums being constructed in Nova Scotia seeing a significant slowdown.
And starts weren’t down throughout the country, either. The Prairies saw an increase of 16.1 per cent; while Quebec started hammering away this month, bringing their number of starts up by 15.4 per cent.