Investors welcome falling housing starts

"As anticipated, the pace of housing starts observed in April was not sustained in May,” said Mathieu Laberge, deputy chief economist at Canada Mortgage and Housing Corporation. “In fact, the pace in May was more in line with the average over the last six months. Although some ups and downs are likely to continue in the months ahead, the pace of housing starts should trend lower as the year progresses."

The number of housing starts in May stood at 212,400 units nationally, according to CMHC. That’s down the 243,800 in April.

The picture of Canada’s largest cities is more of a mixed bag.

The seasonally adjusted annual rate of urban starts decreased by 15.8 per cent to 189,600 units in May. But urban single starts decreased by only 4.2 per cent in May to 64,300 units, although multiple urban starts decreased by 20.7 per cent to 125,300 units.

Property investors largely view the fall-back in construction activity as a good thing, in that it protects the market from any further saturation and the effects oversupply would have on property values.

Still, in some markets investors find their acquisition plans stymied by a dearth of pre-existing properties on the market. It means pricing presents a real challenge to cash flow, say analysts.

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