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A condominium project on Parliament St. between Richmond St. East and Adelaide St. East in Toronto on Sept. 9, 2020.Fred Lum/The Globe and Mail

Strong building activity in Ontario sent the country’s housing starts to a 13-year high in August, as new ground was broken on condos in Toronto and Ottawa, the third straight month of robust activity after a lull because of the coronavirus pandemic.

National housing starts rose 7 per cent in August compared with July, to a seasonally adjusted annual rate of 262,396, according to the Canada Mortgage and Housing Corp. That was the highest level since September, 2007, and another month that bucked the agency’s forecast for a precipitous drop this year.

“We have been surprised by the strength in the housing market,” said Aled Ab Iorwerth, the agency’s deputy chief economist. But he said CMHC would not yet adjust the forecast because of all the risks, including another outbreak, a tepid economic recovery and the eventual end to the government’s financial aid. “We remain concerned,” he said.

Last month, Ontario’s housing starts jumped 37 per cent from July on a seasonally adjusted basis with growth in multiresidential starts offsetting a decline in detached houses. British Columbia’s starts rose 6 per cent and Quebec declined by 3 per cent.

Toronto and the Ottawa region were responsible for the majority of the activity in the country’s most populated province, with Toronto up 28 per cent to 62,040 units on an annualized seasonally adjusted basis. Ottawa-Gatineau nearly doubled to 20,640 units. Other areas in Ontario, such as Kitchener-Cambridge-Waterloo and Brantford, also saw more activity.

Builders have gained confidence to launch new projects, with home resales soaring in most of Southern Ontario, Ottawa, Vancouver and Montreal. In the Toronto area, a combination of record-low mortgage rates and low supply has pushed resales to record levels and prices.

However, the increase in multiresidential starts over the past three months is a reflection of prepandemic demand as developers can only start construction on new condo towers after selling most of their units.

Today, the condo market in the Toronto region is softer than low-rise housing as buyers seek bigger properties and outdoor space. As well, demand for condo rentals has also softened with immigration waning and the sharp drop in international tourism.

“There is a lot of turbulence in the short-term rental market,” Mr. Ab Iorwerth said.

CMHC’s forecast, released in May, calls for housing starts to decline between 51 per cent and 75 per cent this year in the worst-case scenario that includes another economic shutdown. B.C. has already had to roll back some of its reopening with the rise in COVID-19 cases. As well, Ontario has said it will not move to the next stage of the reopening.

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