As interest rates continue to rise, construction and home sales in London, Ontario are progressing at a moderate and varying rate.
as per latest Canada Mortgage and Housing Corporation (CMHC) reports that single-house construction in London is down year-on-year.
The report noted that construction of single-detached homes was down 62 percent in January compared to 2022. While construction of 92 single-unit homes is slated to begin in 2022, only 35 were underway last month.
This puts the standalone monthly seasonally adjusted annualized rate (SAAR) of single home construction down 21 percent compared to December 2022. The trend measures the six-month moving average of the monthly SAAR of total housing stock.
Chris Zakhar, a senior analyst with CMHC, says several groups will have to make efforts to make housing construction even better.
“It is of course vital that all housing industry stakeholders, whether from government level or private industry, all work together to ensure that housing starts allow people to enter the market.” Global News.
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While single dwellings have had a slow start to the year, semi-detached townhouses or apartments have fared better.
Non-single unit manufacturing is up year-on-year and above the six-month average. Construction of 275 non-detached houses began last month. This helps to increase the six month average by 104 per cent.
Jakhar adds that since 2019 an increase in multi-residential homes has been a trend and this is related to the growing need for rentals in London.
“There is simply not enough rental supply to meet the demand in the local market,” Jakhar said.
Nearby Kitchener-Cambridge-Waterloo saw significant growth in construction, particularly with multi-units.
Kitchener-Cambridge-Waterloo saw an 82 percent jump year-over-year for single dwellings and a whopping 324 percent year-over-year growth for multi-units.
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David Carruthers, CMHC’s market analyst for Kitchener-Cambridge-Waterloo, says the high number can’t be taken too strongly without looking at the longer-term trend that points in the direction of growth for the area.
“We at CMHC recognize that a major factor in the affordability challenge we are seeing across the country is certainly a lack of supply,” Carruthers said.
“We are interested and encouraged when we see higher home levels in these areas so that we can continue to add supply to the rental and ownership markets.”
Meanwhile, house sales in London remained almost the same in January compared to the end of 2022.
Compared to a year ago, the home sales market for London and St Thomas declined by 22 per cent.
The Bank of Canada has raised its key interest rate eight times in a row in the past year to reduce inflation. It most recently raised its policy rate by 25 basis points to 4.5 percent last month, the highest since 2007.
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