New housing starts were up, what does 2021 hold for Canadian housing market?

The growth trend in Canada’s housing starts was still seen in November, as the seasonally adjusted annual rate (SAAR) of housing starts showed a 14.4% monthly increase. The Canada Mortgage and Housing Corporation (CMHC) points to non-detached segment as the main driver of this gain.

National starts rose from 215,134 in October to 246,033 last month.

“Multi-family SAAR starts saw a partial recovery in November, following two monthly drops in a row. It helped to offset a decrease in single-detached SAAR starts and pushed the overall trend higher,” – noted Bob Dugan, chief economist at CMHC. “Multi-family starts showed particular activity in Vancouver and Montreal.”

British Columbia SAAR for non-detached homes rose by 76% from October and reached 37,378 units in November. Meanwhile, the single-detached SAAR starts were down by 1%.

In case of Quebec, non-detached residential assets reported a 30% hike, while single-detached SAAR fell by 16% to only 7,616 units.

Nationwide, November’s SAAR of non-detached housing starts was up by 22% and reached 181,821 units. At the same time, the single-detached SAAR went down by 3% to 64,213 units.

In addition to it, the national sales showed an annual gain by 32.1%. According to the Canadian Real Estate Association (CREA), it’s a historically strong result.

CREA expected strong demand increase amid the gradual rebound of consumer purchasing power to cause the lack of inventory in 2021, especially in Ontario and Quebec. However, it’s more likely that it will lead to a cycle of price growth and market competition.

“Today’s tendencies and the forecast for real estate market fundamentals suggest activity will be still relatively healthy next year. Home prices are expected to either keep rising or remain steady across Canada”, – CREA says.

It also predicts a 9.1% annual gain in Canada’s average home price in 2021.