Toronto housing starts, building permits rise on condo strength

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.

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.