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Multi-family construction continues to increase
Jun 02, 2006

Canada’s multi-year boom in multi-unit construction is showing no sign of letting up, even as reduced affordability and rising land costs have begun to dampen construction of single-detached family homes, according to the latest Real Estate Trends from Scotia Economics.

It is a trend that is very evident in Manitoba and especially Winnipeg.

“Ground was broken on more than 105,000 multi-unit dwellings last year in Canada, up slightly from 2004 and more than double the level of a decade earlier,” said Adrienne Warren, senior economist, Scotia Economics. “Construction of single-detached homes, in contrast, fell seven per cent to 120,000 units. 

“We expect these trends to continue in 2006, with multiple-unit starts holding steady and singles declining for a second consecutive year.”

In Manitoba, there were 3,500 multiple-family units built in 2005, a 6.6 per cent increase over the previous year.

By the end of April this year, there were 3,500 units built in Manitoba, a year-to-date change of 21.4 per cent.

Canada Mortgage and Housing Corporation said two more multiple-family projects broke ground in April in Winnipeg, which represents a total of 118 units for the month, a significant increase over the 13 units started in April of last year. 

“The pace of multiple-family construction is expected to be maintained in  2006,” said Dianne Himbeault, CMHC’s senior market analyst in Manitoba, “and by the end of the year will likely outperform 2005.”

Up to the end of April this year, there have been 293 multiple-family units started in Winnipeg, more than double the 125 units started during the same period last year.

For example, one project in the downtown, Fairchild Lofts at 110 Princess St., offers units ranging in size from 635 square feet up to 1,604 square feet. 

Some multiple-family projects, either underway or planned across Manitoba, include Brooklyn Terraces in Steinbach and River Creek Estates in Lockport; within Winnipeg, Pointe Riviere in St. Boniface, as well as The Excelsior, Sky Waterfront, Ship Street Village and The Strand on Waterfront Drive.

According to the Scotia Economics report, multiple-unit housing developments — apartments/condominiums, townhouses and semi-detached homes — are becoming an increasingly dominant fixture of Canada’s residential construction landscape.

Multi-unit projects accounted for 47 per cent of all housing starts in 2005, compared with just 37 per cent at the start of the current housing cycle in 1998.

“Rising home and land costs are making more affordable housing options such as condominiums and townhomes increasingly attractive, particularly for first-time home buyers,” added Warren. 

The recent RBC Economics Housing Affordability Index showed that condos are the most affordable housing option in Manitoba, requiring about 19 per cent of average pre-tax income to cover costs: monthly mortgage payments, utilities and property taxes. 

This is the case even though the year-over-year price of a condo has increased by 24.2 per cent in Manitoba, the highest price surge among all housing types.

While traditional single-detached homes remain the overwhelming choice for the majority of Canadian homeowners, according to Scotia Economics, a gradual shift toward higher-density housing has been under way for several decades. Multi-unit housing accounted for almost 20 per cent of owner-occupied dwellings in 2001, up from 16 per cent in 1991 and just 13 per cent in 1971. 

“Multiples, no doubt, account for an even larger share of both owner-occupied and rental housing today,” added Warren.

The growth of Canada’s largest cities is one factor behind this longer-term shift, as multi-unit homeownership is primarily an urban phenomenon.

Other factors include the shrinking average size of Canadian households and changing lifestyle preferences, with young professionals and empty-nesters attracted to shorter commutes and proximity to downtown cores that frequently comes with mid- and high-rise living. 

Also, multi-unit dwellings, such as condominiums, represent an entry-level investment for Canadians looking to diversify their portfolios.