London housing starts fall off amid material, worker shortage

Housing starts tumbled last month in London – and most of the rest of the country – but officials say that doesn’t reflect falling demand for residential homes in the city, which is at an unprecedented high.

Construction started on 237 residences in London in October, a 17 per cent drop from 287 starts the same month last year, Canada Mortgage and Housing Corp. (CMHC) said.

Of those, 155 were single-family homes, down 14 per cent from more than 180 in October 2020. For all other types of housing, there was a 24 per cent decrease in starts year over year, with more than 80 starts in October compared to almost 105 the same month last year.

Despite the dip, demand for homes in the city is higher than ever. Between January and October this year, construction started on almost 5,050 residences, 83 per cent more than for the same period last year, said Musawer Muhtaj, CMHC analyst for London.

“That’s higher than any other year we have on record, and it’s not really over yet,” said Muhtaj.

Peter Kokkoros, director of building and chief building official with the City of London’s building division, said the city tracks building permits issued, not starts,  which is when builders break ground. The number of permits issued this year has been on the rise.

Kokkoros said permits were issued for a total of 3,371 residential units of all kinds between January and September this year, compared to 2,457 during the same time last year.

Of those, 844 single detached dwelling permits were issued between January and the end of September – a 28 per cent increase from the 660 issued during the same time last year, he said.

Supply chain issues, skilled labour shortages and “the incredible, breakneck pace” of the construction industry during the past year are ongoing challenges and contributing factors to the drop in starts, said Jared Zaifman, CEO of London Home Builders’ Association (LHBA).

“(October) is the first month this year where things have slowed down a little bit,” said Zaifman, who added home builders are “just trying to meet the incredible amount of demand that’s in the community right now.”

There’s been shortages and delays with building materials such as windows and glass, chips for appliances, and resin, said Zaifman, adding he’s “not surprised” construction starts are tapering off given the colder weather, job and skilled labour shortages, and record demand for homes.

“Our costs to live are going up quite tremendously, (but) London, in comparison to other cities, especially in the GTHA (greater Toronto Hamilton area), is still seen as a more affordable place to live,” said Zaifman.

Kokkoros said the city issued a record $1.6 billion in building permits of all types last year, including institutional, residential, commercial, and industrial, and said it’s on track to break that record. Between January and September this year, the construction value of all building permits issued by the city was at $1.3 billion.

“I think the level of growth that we’re going to be seeing in London and region for the next number of years is going to be staying consistently high,” said Zaifman. Despite the challenges of keeping up the pace, he said, “the industry is still aggressively looking to meet that demand.”

semarotta@postmedia.com