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Surge in Quebec starts a 'blip' in sluggish condo market

 
 

Surge in Quebec starts a 'blip' in sluggish condo market

 

Surge in Quebec starts a 'blip' in sluggish condo market

 

The District Griffin condo development is pictured in August. New home construction rose nationally in February, but resales remain soft, especially in the condo sector, economists say.

Photograph by: Marie-France Coallier , The Gazette

MONTREAL — A 69 per cent rise in urban Quebec housing starts helped drive up new home construction nationally in February, ending a three-month string of modest declines in Canada.

But the uptick in seasonally adjusted Quebec housing starts between January and February is not a new trend, but rather due to construction moving forward on multiple apartment developments, “notably in downtown Montreal,” Canada Mortgage and Housing Corp. said Monday.

“Housing starts in (Greater) Montreal trended higher in February as a result of the start of construction on a few large multi-unit residential projects. For 2014, however, we forecast that the level of starts will be relatively comparable to that recorded in 2013,” David L’Heureux, senior market analyst at CMHC, said in a statement.

The state of the housing industry is watched carefully as an indicator of the economy’s general health, since construction provides many jobs, mortgage lending is a major business for banks and many Canadian families consider their home to be their biggest investment and asset.

“We think this is a blip, as market conditions in Quebec’s resale market do not justify an increase in new dwellings,” National Bank economist Marc Pinsonneault said in a note.

February data published Monday show Greater Montreal resales declined two per cent, while active listings rose nine per cent, both on an annual basis.

On Montreal Island, sales declined nine per cent, year over year, even as the median price of a condo grew two per cent to $264,000 — the largest increase in the last 10 months, the Greater Montreal Real Estate Board said.

Buyers continued to have the upper hand in the Greater Montreal condo market, despite the jump in new multi-unit home construction last month.

In a note, BMO senior economist Benjamin Reitzes said Quebec had the strongest gain of all the provinces in February. Total Quebec starts rose 56.2 per cent to the highest level in nearly two years, he said.

“Despite the big gain for Quebec, starts over the past year remain near decade-low levels,” Reitzes added. “Atlantic Canada saw a solid increase in activity, while Ontario was about flat.”

Nationally, CMHC estimates there were 11,097 actual starts (in all areas) in February, which extrapolated out over 12 months gives a seasonally adjusted annual rate of 192,094 starts, up from 180,481 in January.

CMHC deputy chief economist Mathieu Laberge said housing construction levels have been relatively stable since August, with month-to-month variations of two per cent or less.

“This is in line with CMHC’s outlook calling for a stable housing market in 2014,” Laberge said.

alampert@montrealgazette.com

Twitter: RealDealMtl

Canadian Press contributed to this report.