Calgary housing starts fall 40 per cent

Demand wanes amid job losses, slowing economy

Calgary’s housing market showed signs of weakness in the face of high unemployment and sluggish population growth, as the pace of residential construction took a nosedive last month over yearago levels.

Construction began on 630 homes in the city in October, a more than 40 per cent decline from housing starts posted a year earlier, the Canada Mortgage and Housing Corp. reported Tuesday.

The national housing agency said the biggest culprit behind the slide was a drop in the pace of condo and apartment construction.

According to analyst Richard Cho, demand for new homes — especially condos — waned as Calgary’s economy was battered with job losses and sluggish income and population growth, while supply remains high.

While the city’s residential construction market appeared weak last month, the real-estate sector was strong, as sales increased from year-ago levels for the second straight month.

The Calgary Real Estate Board said last week the 16 per cent jump in the number of homes sold in October, compared with the same month last year, may have been due in part to home buyers avoiding tighter mortgage rules, which came into effect mid-month.

The surge may also be linked to falling prices and the availability of lower-priced homes, the board said. One realtor has suggested buyers are attempting to snatch up homes before the economy turns around, sending prices higher.

Statistics Canada released more data Tuesday that appear to suggest strength in Calgary’s construction market, but there are more caveats.

The national agency said Calgary issued $486 million worth of building permits in September, the third straight month of gains. Provincewide, the value of building permits spiked by 10 per cent over the previous month to $1.1 billion, the highest level in almost a year.

According to ATB Financial, construction companies anticipated their costs would increase from new building code rules and secured their permits before the changes came into effect.

The new rules, announced last month, impose energy efficiency requirements for windows, lighting, insulation, heating, ventilation and air-conditioning. The changes are expected to increase construction costs, but the NDP government says they will be offset by energy savings. Statistics Canada said the value of building permits issued across Alberta in September fell by 21 per cent compared to year-ago levels. In Calgary, the value of building permits dropped by 12 per cent from what they were in September 2015.