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News Story
Local housing starts plunge during 2005
By Ottawa Business Journal Staff
Tue, Jan 10, 2006 8:00 AM EST



Ottawa homebuilders started work on 31 per cent fewer new homes in 2005, a sharp pullback from the record year of 2004.

Canada Mortgage and Housing says local housing starts totaled 4,982 last year, compared to 7,243 in 2004.

The slowdown was not unexpected, according to CMHC senior housing analyst Christian Douchant.

"An increasing supply of homes in the resale market gave consumers much more choice. In previous years the existing home supply was much tighter. Consequently, home construction has settled to a more sustainable level," says Mr. Douchant.

Construction of single-family homes declined 28 per cent, while apartment construction fell 37 per cent. Townhouse starts were down 36 per cent in 2005 compared to 2004.

"Affordability will become a more important factor in 2006 and we should expect multi-family construction to remain respectable," says Mr. Douchant.

Builders were busiest in the rural western parts of the city. Rideau Township and West Carleton were the only areas to register increases in housing starts in 2005. The biggest decline was in the former municipality of Gloucester, where housing starts plunged 49 per cent compared to 2004.

CMHC is forecasting 4,700 new housing starts in Ottawa in 2006.

Nationally, Canada's homebuilders had their second-best year since 1988 during 2005.

CMHC says 223,900 new homes were built last year, down 4.1 per cent from 2004 levels. Low mortgage rates, healthy labour markets and steady income growth all contributed to the strong year.

During December, the annual rate of housing starts rose marginally to 227,700 from 225,000 in November.

The seasonally adjusted annual rate of urban starts rose 1.4 per cent to 198,100 units in December compared to the previous month, due to a 3.5 per cent increase in single starts to 97,800 units. Multiple starts were down 0.6 per cent to 100,300 units in December compared to November.

Urban housing starts were up 4.4 per cent in Ontario and 10.8 per cent in British Columbia during the last month of the year.