Ontario, BC seeing steady multi-family demand amid COVID-19

by Ephraim Vecina13 May 2020

Despite pandemic pressures, demand for multi-family assets continues to persist in Ontario and British Columbia, according to Canada Mortgage and Housing Corporation.

CMHC said that this helped compensate for the considerable slowdown in new home construction in March, which largely came about due to the economic impact of the COVID-19 pandemic.

Not taking into account Quebec, which resumed residential construction only in late April, the Canadian housing starts trend was 155,995 units during that month, up from 153,463 units in March.

CMHC data showed that Ontario represented the largest fraction of this volume with 93,628 starts in April, up by 42% month-over-month. BC came at a distant second with 27,767 starts, having fallen by 10% from March.

In stark contrast, Alberta’s rate of new home construction fell by 28%, although the province’s actual number of starts in April was at 23,262 units.

Still, the national starts trend could benefit from the current interest rate environment, at least for the time being.

Altus Group said recently that the Canadian central bank’s decision to cut short-term rates might prove a significant buffer against the worst effects of the coronavirus.

“The Bank of Canada [chopped] the target for the overnight rate by a cumulative full percentage point in one scheduled and one ‘emergency’ cut in less than 10 days. This has caused a drop in variable mortgage rates of about 70 basis points on average (for a 5-year term),” Altus Group said.

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