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Toronto: Canada's housing starts jumped to the highest level in seven months, as the country's two largest provinces ramped up construction on apartments, townhouses and condominiums.

Builders started work on an annualised 264,506 units in May, according to data released on Monday by the Canada Mortgage and Housing Corp. That's an increase of 9.7 per cent from a month earlier, more than economists had expected in a Bloomberg survey.

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Ontario and Quebec "- the country's most populous provinces "- led the increase in starts, rising 18 per cent and 67 per cent respectively. Housing starts fell 16 per cent in British Columbia, Canada's westernmost province. Compositionally, the number of single-detached homes that began construction during the month was little changed, meaning the gains were concentrated in multiple-unit builds.

The federal government has announced billions in new loans and tax breaks intended to encourage construction as housing affordability has worsened. The country's chronic shortage of homes has been further aggravated by an influx of temporary residents that has driven population growth to one of the highest levels in developed countries.

CMHC estimates Canada needs to build at least 3.5 million additional housing units by 2030 to restore affordability.

"While this is good news for housing supply, we do expect downward pressure on starts through the rest of 2024," Bob Dugan, CMHC's chief economist, said in the release.