August 27, 2010

Carrick: Canada’s construction starts in a transition phase

Total construction starts in Canada through July of this year were up 73 per cent in square footage and up 70 per cent in dollar volume versus the first seven months of last year, according to CanaData figures.

The residential component was up 87 per cent in square footage and up 84 per cent in dollars.

Non-residential building was up 48 per cent in square feet and up 21 per cent in dollars, while engineering was up 16 per cent in dollars.

The residential strength corresponded with starts as reported by Canada Mortgage and Housing Corp.

The single-family-home market is expected to weaken considerably in the second half of this year, due to harmonized sales tax introductions in Ontario and B.C., as well as interest rate increases and poorer resale markets.

“What is driving the multiple-unit market remains a mystery,” says CanaData chief economist Alex Carrick in his latest report.

“New major condo projects continue to be initiated, but the inventory of unsold units is more than double what it should be, according to historical averages. A serious correction seems all but inevitable.”

In non-residential building work, commercial starts are about even with last year.

Industrial construction starts have all but disappeared (down 61 per cent in square feet and down 95 per cent in dollars).

You can read Carrick’s full report here.

-RCD Digital Media

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