That December decline reflects slowing plans for condo construction in Toronto, but also right across Canada’s urban landscape, according to StatsCan.
Overall the value of permit numbers for December fell 11.2 per cent, compounding the 14.5 per cent drop in November. That’s entirely different from the 5 per cent gain anticipated by most economists.
Still, it’s that condo shortfall that has pundits fearful the same construction sector that has led economic growth over the last two years may actually act as a drag in 2013.
Permits for multi-family housing, which include condominiums, were 41.1 per cent lower than in June, the last month of more liberal mortgage rules, tighten up to slow rising household debt.
Those new qualifying standards, including a reduction in the maximum amortization for insured mortgages, have cut into first-time buyer numbers, something that has direct impact on condo demand.
For investors in high-rise units, the slowdown comes as welcomed news, helping alleviate fears values will plummet as supply overwhelms demand.
Fewer condo construction plans could also work to protect rents by keeping vacancy rate low.
Still a lull in construction could have very negative effects on demand as workers – even outside the housing sector – see incomes slashed as a knock-on effect of the slowdown.
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