Local home construction slips, resales gain in April.
May 10, 2004 - New home construction in Ottawa last month eased from the year before, while the resale market enjoyed an upswing in activity, according to separate reports released on Monday.
The first report, from Canada Mortgage and Housing Corp., said new home construction in Ottawa eased in April from the year before, but was stronger than in March.
CMHC said construction began on 638 new housing units in April, down by eight per cent from April 2003, but up by 54.5 per cent from 413 starts in March.
Despite the year over year decline, the federal agency remains bullish on the strength of the local housing market, citing the fact that starts on the year to date remain higher than a year ago.
In the first four months of 2004, construction began on 1,911 new residential units, an increase of 10.3 per cent from the same period of 2003.
With the local market suffering from some of the highest home prices in the country, CMHC said the more affordable multiples market continues to account for most new home construction in the nation's capital.
In April, starts on multiple-type dwelling units such as townhouses, terrace homes, condos and apartments accounted for almost 59 per cent of all new home construction.
"The multi-family housing market continues to make up the lion's share of all housing starts, achieving 1,258 starts from January to April of this year, up 28 per cent from the same period in 2003," Christian Douchant, senior market analyst for Ottawa, said in a statement.
Multiple starts totalled 374 in April, up by 17 per cent from April 2003. Starts for more expensive single-family homes, meanwhile, fell by 29 per cent last month from a year ago, to 264.
However, Douchant pointed out that the number of single-family starts remained well above the 10-year average of 255 for the month April.
On the year to date, singles starts are down by 13 per cent from the first four months of 2003.
The April report comes a week after CMHC released its Spring Housing Market Outlook for Ottawa. The report forecasts that flat employment will reduce the level of migration to the city, reducing demand for new homes. The expectation that the Bank of Canada will begin raising interest rates by late 2004 or early 2005 will also curtail demand as borrowing costs increase.
Nonetheless, CMHC still expects new home prices to gain this year by a strong six per cent, down from 10 per cent in 2003. Higher home prices will continue to fuel demand for more affordable multiple-type dwelling units and erode the appeal of pricier single-family homes.
RESALES ROBUST IN APRIL
In a separate report Monday, the Ottawa Real Estate Board reported that the local resale market remained strong in April, with the number of properties changing hands up on both the month and the year to date.
OREB reported that 1,488 residential properties were sold through the universally used Multiple Listing Service last month, up by 20 per cent from 1,239 in April 2003.
The total for the first four months of 2004 is 4,444, up by 11.4 per cent from the year before.
"As predicted ... the number of sales remains very strong," OREB president Glenda Brindle said in a statement, adding that, "While some pockets of the city are experiencing multiple offers, most of the city is experiencing a more balanced market."
In its forecast last week, CMHC forecast that the resale market will remain strong and enjoy more balanced conditions characterized by more listings in 2004. It forecast home resales of 12,600, compared with 12,871 in 2003.
© Copyright 2003 The Ottawa Business Journal