Capital Housing Trade Cooling

Ottawa's new home industry, a sizzling sector of the economy in the first years of the decade, has slowed sharply in the past 18 months.

According to Statistics Canada, 1,983 new housing units were approved between January and May. And that's hardly an indication that the market is falling down, it's a sharp reversal from 2002, when permits were issued during the same period for construction of nearly 3,300 homes.

The boom began in 2001 with 2,855 new housing units and continued through 2004 with permits for another 2,878.

The month of May continued a sluggish trend that has been going on since early last year with the value of residential building permits down 7.1% from the month before and about 32% lower than the average month in 2005.

The entire housing market in Central Canada is cooling and Ottawa is part of that trend.

These new figures for building permits came just a day after a real estate report showing that resale homes in Ottawa have increased just 4% in the past 12 months -- less than half the national average.

Permits for multiple housing units, a mainstay in recent years, dropped 34% in May from April to $14.8 million.

Nationally the trend was going in the other direction, with municipalities issuing $5.4 billion worth of building permits in May, up 6.9% from April.

The showing was much stronger than the 1.3% rise economists had expected.

The housing sector continued to be boosted by advantageous mortgage rates, although they have increased progressively over the last year.