“Certain areas of the national housing market may be more vulnerable to price declines, particularly the multiple-unit segment of the market, which is showing signs of disequilibrium,” reads the Bank of Canada’s December economic review, issued Thursday. “The supply of completed but unoccupied condominiums is elevated, which suggests a heightened risk of a correction in this market.”
That phenomenon is already being felt by condominium investors in Vancouver, where a glut of high-end units now sit idling, in part because of the HST, say market analysts.
The number of new condo developments in Toronto is on the upswing, although here analysts suggest the market is less susceptible to a correction given the strength of the GTA market, buoyed by immigration.
Still, developers in most markets now appear to be heeding the Bank’s warnings.
Housing starts across the country declined in November, reaching a level more consistent with “the rate of household formation,” according to StatsCan.
In Canada's cities, the seasonally adjusted annual rate of urban starts decreased by 14.4% to 158,900 units in November. Driving the drop was were multiple urban starts, down by 23.3% to 95,300 units.