Housing starts rose unexpectedly in February in Toronto, Canada’s largest city, and building permits surged the previous month as demand for condos continued to bolster an otherwise slowing market, two new reports show. Groundbreaking for new homes rose to a 229,737 unit annual rate in February, defying expectations for a flat month, as a surge in construction of new buildings with multiple units, typically condos, more than offset a slowdown in single-detached starts, the Canada Mortgage and Housing Corporation said. Toronto housing starts trended higher last month, as groundbreaking on flats hit a record, the CMHC said. Condo demand has been strong in Toronto (and in Vancouver) in part because it is the only affordable housing left after a long boom spurred double-digit price rises in detached housing, say commentators. Steep jump in Toronto rents sends flat hunters to the suburbs But the introduction of a foreign buyers’ tax in both cities in recent years as well as tighter mortgage rules that took effect in January and rising mortgage rates are expected to curb overall demand, and analysts are now divided over whether the market might crash or manage a soft landing. “We’ll see how much tempered speculative demand and rising interest rates soften activity later in the year, but recent policy measures have largely hit higher-end prices, while underlying demand of for units, especially in the mid-range of the market, remains strong,” said Robert Kavcic, senior economist at BMO Capital Markets, said in a research note. A separate report from Statistics Canada confirmed the condo market’s strength, showing the value of Canadian building permits rose 5.6 per cent in January, the most in eight months, on higher construction intentions for multi-family homes in Ontario. The increase – significantly greater than the 1.3 per cent advance predicted by analysts in a Reuters poll – was the biggest since a 12.9 per cent jump in May 2017. Statscan revised December’s gain to 2.5 per cent from an initial 4.8 per cent. The value of permits for multi-family dwellings in Ontario, the most populous province and home to Toronto, soared 71 per cent, more than offsetting a 39.7 per cent drop in December. A separate report showed new home prices were unchanged for a second month in a row in January as Toronto saw a 0.1 per cent decline, the first decrease since July 2014.