Last week, we looked at some macroeconomic influencers on Canada’s housing industry courtesy of the Conference Board of Canada. This week, we will look at the results and trends across Canada.
In 2012, Canadian housing starts were at 215,000, performing slightly better than projected. This increase was due primarily to some large multi-family projects in major urban centres as the single family detached market remained steady but somewhat flat. Projections for 2013 and 2014 show a slight decline with a significant rebound the following three years.
To no one's surprise, the multi-family segment of the industry will be the driver of starts in Canada for the next few years. This is due primarily to the overwhelming influence of numbers from Toronto, Vancouver and Montreal where the multi-family segment dominates the market much moreso than on the Prairies or Atlantic Canada. Longer commute times, gas prices and changing lifestyles are all factors that influence this trend. In fact, national market share indicates a 60 per cent to 40 per cent split between multi and SFD going forward in contrast with the exact opposite 10 years ago. Manitoba traditionally experiences numbers showing a majority of single family detached starts.
Condo prices have skyrocketed in Toronto and Vancouver in the past decade while remaining much more reasonable here. Those two markets cannot help but experience a cooling-off period both in terms of starts and prices over the next couple of years.
Another factor that cannot be ignored is the federal government's recent decision to shorten the amortization period from 30 to 25 years. This has had a most significant effect on first-time buyers.
It is interesting to note nationally, the cost of construction is expected to slow due to a reduced pace of building, job cuts and a decline in the average wage rate. Those criteria are certainly not expected to materialize in Manitoba. As mentioned earlier, material prices will definitely be a factor.
In conclusion, there are many lessons to be learned from observing the residential construction industry in other parts of Canada. In some cases, we get a preview of what we are about to experience. In other cases, we are able to learn from others and avoid certain pitfalls. The most important factor is to never stop learning.
Mike Moore is president of the Manitoba Home Builders Association.