OTTAWA, Aug. 25 /CNW/ - Canada's residential construction industry
rebounded quickly from the recession. However, home building activity is
expected to slow down in the second half of year due to declining
affordability, according to The Conference Board of Canada's Canadian
Industrial Outlook: Canada's Residential Construction Industry - Summer
"Most of the costs associated with home ownership, such as mortgage
costs and insurance, are outstripping inflation and income growth. As a
result, housing affordability in Canada, which has been deteriorating
over the past decade, will continue to decline during the next two
years," said Michael Burt, Associate Director, Industrial Economic
Although the performance of the Canadian housing industry is weakening,
it contrasts with the situation in the U.S. market, where data released
this week showed that existing single-family home sales fell by 27 per
cent in July. Housing market fundamentals, such as lending and building
practices, are stronger in Canada than in the United States, generating
a more positive outlook for Canadian residential construction.
The strong pace of spending at the beginning of the year means that, by
most measures, the Canadian industry has fully recovered from the
recession. Revenues have already returned to their pre-recession peak.
However, higher costs, particularly for labour and wood products, have
prevented a recovery in profit levels.
Although new home construction activity is expected to slow, housing
starts will remain at a healthy level. The slowdown represents a shift
to a more sustainable building pace rather than the beginning of a large
correction in demand.
Profits are expected to fall to $2.9 billion in 2010, their lowest level
since 2005. Profit margins are expected to begin improving in the second
half of the year and to continue to rise steadily. However, profits are
not expected to return to their pre-recession levels before the end of
the forecast period (through 2014).
SOURCE Conference Board of Canada
For further information: For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448