EDMONTON — Low oil prices and the economic downturn are hurting housing construction in Calgary and Edmonton, says the Canada Mortgage and Housing Corporation.
The corporation says housing starts in Calgary are down 29 per cent overall so far this year compared with the same time in 2014.
Analyst Richard Cho said the new data reflects several factors, including a weak job market, fewer people moving to Calgary and more listings in the resale market.
"The decline in the price for oil is having an impact on the labour market as well as on migration, which is having an impact on demand for new homes,'' Cho said Thursday.
"There is more competition from the resale market as well, so buyers have more choice.''
The largest decline is in single-detached homes, where construction is down 39 per cent.
Multi-family units, which include condos, apartments and row housing, is down 23 per cent, he said.
The Calgary numbers are in stark contrast to last year, when housing starts were at record highs.
CMHC said housing starts in Edmonton are up 35 per cent compared with the same period in 2014, thanks mainly to lots of multi-family unit construction early in the year.
But overall housing starts were down 12 per cent last month due to the soft economy.
Christina Butchart, a CHMC analyst for the Edmonton metropolitan area, said that slowdown is forecast to continue as builders reduce production.
"We are expecting that employment growth will be slower this year and we are also expecting migration to fall this year and next year — that will lead to lower demand,'' she said.
CHMC analysts are forecasting the negative trend in housing starts to continue for both cities in 2016.
Earlier this month Todd Hirsch, chief economist of ATB Financial, was projecting a recession in Alberta this year.
That compares with real GDP growth in the province of 4.4 per cent in 2014, when oil and natural gas prices were much higher.
Hirsch blamed the drop in oil prices from more than US$100 in the summer of 2014.
Oil was trading for around US$49 per barrel on Thursday.
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