Some long-awaited apartment projects provided a big boost to London-area housing starts last month.
The Canada Mortgage and Housing Corp. (CMHC) reports 610 housing starts in London, St. Thomas and surrounding municipalities in June — compared to 565 in the same month last year.
The big boost was in multi-family starts, with 480 units compared to 336 units last June.
But the number of single-family starts took a big dip last month, with only 130 compared to 229 in the same month last year.
Sue Wastell, president of the London Home Builders Association, says demand is still strong, but a temporary shortage of serviced lots has slowed down the market. She said an unusually busy season last year depleted the supply
“We have had to pause buying because no builder has any inventory remaining. In most years it’s more steady, but last year was an anomaly where everything got bought up quickly,” said Wastell, who noted lots in key suburban areas are now becoming available.
She said the labour market is still tight, with bricklayers in especially short supply. A tight supply of resale homes continues to drive more buyers in the new home market.
Demand for condos remains strong with millennials, international migrants, downsizing baby boomers and speculators all clambering for seemingly the last affordable little slice of the sky. – Priscilla Thiagamoorthy of BMO Capital Markets
“People have been looking, but they can’t find what they need or want because of the low resale inventory,” said Wastell.
Until last month there had been a sharp decline in the multi-family housing starts.
But two large projects are now underway — a 24-storey tower on York Street by the Tricar Group and an 11-storey building on Pomeroy Lane by Oak Oak Properties.
Other high-rise apartment projects have been proposed, but some have been held up by planning or legal issues.
The next one ready to proceed is on Richmond Row, where Old Oak Properties is getting ready to demolish some commercial buildings to construct a 32-storey high-rise.
Apartment construction is likely to be spurred by a tightening rental market in the city.
The CMHC’s latest rental survey pegged the apartment vacancy rate for the metro London area at 1.8 per cent, its lowest rate in 18 years.
Apartment-hunting website PadMapper, which surveys prices in major Canadian cities monthly, shows average rents for a one-bedroom apartment in London have soared 15 per cent during the last year to $980 a month, including a 3.2 per cent jump in June alone.
Last year, spinoff from the unusually strong resale home market helped push the annual number of housing starts to 3,967 units, the largest total in decades. London’s record of 5,444 starts was set back in 1972.
In the first half of this year there have been 718 single-detached starts, lagging behind 800 in first half of 2017.
Despite the strong numbers last month, the year-to-date multi-family starts also lag behind, with 787 compared to 1,148 last year. In total there have been 1,505 housing starts this year, well below the 1,948 in the same period last year.
The St. Thomas market was a bright spot with 127 housing starts so far this year compared to 83 in the same period last year.
Across Canada there was an unexpected surge in housing starts last month, snapping three straight months of decline. The CHMC said the estimated annual number of housing starts jumped 28 per cent to 248,100. Urban multi-family starts drove the increase up 45 per cent.
“Demand for condos remains strong with millennials, international migrants, downsizing baby boomers and speculators all clambering for seemingly the last affordable little slice of the sky,” said Priscilla Thiagamoorthy of BMO Capital Markets.
Condo construction in Ontario led the market, with starts in the province surging 93 per cent to 100,800 annualized units.
“The housing market continues to show signs of stabilization. Residential construction activity remains solid, supported by the fastest population growth in almost three decades, solid job gains and still-strong wage growth,” said Thiagamoorthy.
LONDON-AREA HOUSING STARTS
June 2018 (2017 in brackets)
Single-detached 130 (229)
Multi-family 480 (336)
Total 610 (565)
Single-detached 718 (800)
Multi-family 787 (1,148)
Total 1,505 (1,948)