01/10/2012 10:53 EST | Updated 03/11/2012 05:12 EDT

Housing starts expected to slow

Canadian housing starts made strong gains in December, climbing to 200,200 on an annualized basis, compared with 185,600 in November.

For the year, preliminary figures suggest starts came in at 193,000 in 2011. Actual housing starts for 2011 are still being verified and will be reported by Canada Mortgage and Housing later in January.

But TD Bank economist Diana Petramala doubted the rate of 202,000 over the last six months is sustainable.

"Most of the strength has been driven by multi-unit starts (condos) particularly in major urban centres like Toronto and Vancouver," she said in a commentary.

"There is now a large overhang of completed, but unoccupied multi-units as low interest rate likely fueled some overbuilding in the condo market."

Construction of multi-unit homes in cities rose 14.5 per cent while single unit starts increased 3.8 per cent, for a second consecutive monthly gain.

Seasonally adjusted starts in the Atlantic region rose 52.9 per cent and 35.3 per cent in Ontario.

Starts in cities in British Columbia contracted by 19.8 per cent and on the Prairies by 11 per cent.

Petramala expected slower economic growth will make housing demand and building more subdued in 2012.

She projected starts this year will be in an annualized range of 175,000 to185,000 per month.