It’s the year of the condo for Canada’s housing market.
Construction of multiple units as a share of total new housing starts is at the highest level since 1971, data from Canada Mortgage & Housing Corp. show, as builders in Toronto and Vancouver press ahead with new development.
The condo boom -- fueled in part by affordability issues in Canada’s two priciest markets -- is helping offset a slump in construction of single detached homes across the country.
The market may be experiencing an “affordability-based transition of demand from singles to multiples,” Bob Dugan, chief economist at the Ottawa-based housing agency, said in a telephone interview Tuesday, citing a “growing price gap” between detached homes and condominiums.
Developers need to be mindful of the risk of overbuilding, leaving units completed and unsold, Dugan said in a statement. Toronto-Dominion Bank economist Diana Petramala echoed that sentiment in a note to clients.
“In the wake of rising new home inventory, builders should focus on inventory management,” she said. Petramala also said that tight conditions -- low supply and high prices -- for single-family homes, will continue encouraging construction.
Data released Tuesday from the housing agency show builders have begun construction in urban areas on 168,057 new units in the first 11 months of this year, up 6 percent The gain is driven by multiple units, which are up 14 percent to 114,965. Detached home construction is down 8 percent to 53,092.
Multiples made up 68.4 percent of all new construction, the highest level since 1971 over the first 11 months of the year, the data show.