A decline in multi-family construction contributed to a decline in Kamloops housing starts in 2012, according to Canada Mortgage and Housing Corp.
The latest CMHC report shows construction started on 481 homes last year, down from 510 in 2011 — slightly less than a six per cent decline.
Construction increased by 40 in single-family units, to 283, while multi-family construction fell to 198. Activity fell steeply in December.
Kelowna also saw a decline in construction for the year.
Across Canada, housing starts declined for the fourth consecutive month in December, but remained well above sustainable levels, leading to further fears the economically important sector could be headed for a hard landing.
CMHC said the pace of housing starts slowed by a modest 1.7 per cent last month to 197,976 on an annual basis, the fourth drop in as many months.
But the decline was less than analysts expected, even before the agency revised November’s starts upwards to 201,376.
That made the average starts for 2012 tip the scale at a hefty 215,171, up 11.4 per cent from 2011 and the highest level since 2007.
On Tuesday, Canada’s leading bankers judged the country’s real estate market as “relatively solid” despite the slowdown and concerns about overbuilding in the condominium segment, forecasting that 2013 would see a “soft landing” in the market.
But December’s relatively strong numbers also gave skeptics more reason to warn of a future reckoning.
David Madani of Capital Economics said Canada’s real estate market is exhibiting the same cracks as the United States before the 2007 crash.
Toronto resales of existing properties have fallen 19.5 per cent from a year ago, while Vancouver’s crash has been worse, down 31.1 per cent from last year.
“The upshot is that too many housing units have and are still being built, excesses that will eventually upset the balance of demand and supply,” Madani warns.
Bank of Canada governor Mark Carney has long voiced concerns that Canadians are borrowing too much to enter the housing market, primarily because low interest rates makes ownership affordable even with inflated home prices.
In its most recent economic outlook, the central bank forecast housing would be a net drag on the economy in both 2013 and 2014, although it sees the extent of the pull-back in modest terms.
Bank of Montreal economist Robert Kavcic said he expects homebuilding activity to slow to about 180,000 this year, which “would meet underlying demographic demand, and be just the scenario that policy-makers ordered.”