21% swoon on island of Montreal. All categories were hit, save rentals, where demand was strong for seniors' lodging

A seven-year run of torrid housing construction in the Montreal area came to an end in 2005, with a 12-per-cent decrease in housing starts, according to the Canada Mortgage and Housing Corp.

A total of 25,317 new single-family homes, condominiums and rental units were started last year, 3,356 fewer than in 2004, the federal housing agency said in a yearend report. The Montreal area includes the island, the South Shore, Laval and the North Shore as far as St. Jerome and the western off-island suburbs in Vaudreuil-Soulanges.

The drop in new-home construction was felt across the metropolitan area, though the decline was sharpest on the island of Montreal, where starts fell by 21 per cent.

Construction fell across all categories, with the exception of the rental market, which saw a four-per-cent increase in activity. The agency considers a housing unit started when a concrete foundation is poured.

The 2005 rental market was notable for a strong surge in demand for seniors' residences. Of the 6,687 apartments started, more than half were in buildings geared toward an elderly clientele, said Paul Cardinal, a senior market analyst with the CMHC in Montreal. Laval and Longueuil were especially active sectors for seniors' housing.

Condominium construction declined 13 per cent across the region, with only the North Shore suburbs showing a small increase in the number of units started.

The CMHC had warned that demand for condos was tailing off for a variety of reasons. The easing of the rental market had an impact, as did a steadily increasing inventory of built and unoccupied units across Greater Montreal during the last 18 months.

Growing inventory on the resale side also meant buyers had more properties from which to choose. Nonetheless, 2005 was still the second-best year on record for condo starts.

Single-family homes, whether detached, semi-detached or rowhouses, registered the biggest decline, with 9,871 starts, compared with 12,177 in 2004, a 19-per-cent drop.

Three of the region's four survey areas registered double-digit declines. The island of Montreal led the the way with a 21-per-cent drop in construction, or 2,277 few units started. Starts fell by 13 per cent in Vaudreuil-Soulanges and by 12 per cent on the South Shore.

The so-called north crown, ranging from Laval to the lower Laurentians, has reigned as the undisputed leader in new-home construction since 1988.

Last year was no exception, with more than half of all the single-detached homes built in Greater Montreal erected north of the island.

But even Laval and environs saw a two-per-cent dip in housing starts, though construction held steady at 7,034 units, virtually unchanged from the previous year, in off-island such suburbs as Blainville, Rosemere and Ste. Therese.

According to Cardinal, construction slipped in particular during the months of March ( - 48 per cent), May (- 36 per cent) and November (- 24 per cent.), though he warned against reading too much into monthly fluctuations.

Also yesterday, Statistics Canada reported November new-home prices rose nationally by 0.7 per cent and 0.3 per cent in Montreal. A steady market for new homes, combined with higher building material and labour costs pushed prices up. Land value increases contributed to higher prices in seven of the metropolitan areas surveyed.

StatsCan also reported that the value of building permits issued across the country in November totalled $4.9 billion, the first time the figure has fallen below the $5-billion mark since July. The value of building permits issued in Montreal was $483.6 million, 10.7-per-cent lower than in October.

Nationally, construction starts rose 1.2 per cent to a seasonally adjusted annual pace of 227,000 units in December, Canada Mortgage and Housing Corp. reported.

The increase in home building was despite a 5.4-per-cent drop a month earlier in home-building permits to $3.2 billion, reflecting a significant decline in apartment and condominium construction plans, Statistics Canada said. It also reported that non-residential building plans fell 6.3 per cent in November to $1.8 billion, the third consecutive monthly decline.

Housing starts decline in greater Montreal last year

Single-family home

2004 - 12,177
2005 - 9,871

Apartments

2004 - 6,443
2005 - 6,687

Condominiums

2004 - 10,053
2005 - 8,758