Home starts show improvement
It took a last-month flurry of residential construction activity, but Red Deer builders have topped their 2011 housing start tally.
Canada Mortgage and Housing Corp. reported on Wednesday that work commenced on 53 home in Red Deer during December.
That was 13 more than in the final month of 2011, and meant that the 2012 tally of 568 exceeded the previous year’s total by 13.
Starts on single-detached homes increased to 326 last year, as compared with 295 in 2011.
However, the number of starts on other types of housing decreased to 242 from 260.
In December, there were 30 single-detached starts in Red Deer, up from 11; and 23 starts on other types of housing, down from 29.
The two per cent increase in housing starts in Red Deer last year was modest compared to other Central Alberta communities. The city of Lacombe saw its 2012 total nearly double to 209 from 105, while housing starts in Sylvan Lake were up 49 per cent, to 207 from 139.
Among the biggest urban centres in Alberta, Medicine Hat saw the greatest year-over-year jump in housing starts — at 89 per cent.
The Calgary and Edmonton metropolitan areas were both up 38 per cent in 2012, and the city of Grande Prairie climbed 33 per cent
Housing starts in Lethbridge dropped by 14 per cent in 2012, while in the Regional Municipality of Wood Buffalo they were down 18 per cent.
CMHC said the pace of housing starts nationally slowed by 1.7 per cent last month. But that was less than analysts had expected, with average starts for 2012 up 11.4 per cent from 2011 and the highest level since 2007.
On Tuesday, Canada’s leading bankers judged the country’s real estate market as “relatively solid” despite the slowdown and concerns about overbuilding in the condominium segment, forecasting that 2013 would see a “soft landing” in the market.
But December’s relatively strong numbers gave skeptics more reason to warn of a future reckoning.
David Madani of Capital Economics said Canada’s real estate market is exhibiting the same cracks as the United States before the 2007 crash.
While lower, December’s starts were still well above the annual growth requirement needed to accommodate population growth. Meanwhile, resales of existing properties in Toronto have fallen 19.5 per cent from a year ago, while Vancouver’s crash has been worse, down 31.1 per cent from last year.
“The upshot is that too many housing units have and are still being built, excesses that will eventually upset the balance of demand and supply,” Madani warned.
“We will stand by our long held view that home prices are likely to fall by around 25 per cent over the next year or two.”
Bank of Canada governor Mark Carney has long voiced concerns that Canadians are borrowing too much to enter the housing market, primarily because low interest rates makes ownership affordable even with inflated home prices.
The worry is once the correction comes — whether soft or hard — Canadians will find themselves with record levels of debt and depreciating assets, which could slow consumer spending not just in real estate but across the economy.
In its most recent economic outlook, the central bank forecast housing would be a net drag on the economy in both 2013 and 2014, although it sees the extent of the pull-back in modest terms.
Regionally, Ontario led the way in starts with a rise of 31.1 per cent. But there were setbacks in the Atlantic region, Quebec and the Prairies.
With files from The Canadian Press.