Residential Mortgage Commentary - Housing starts stagnate
While Canada's main political Parties have been doing a lot of talking about getting people into homes, actual construction continues to lag.
The latest figures from Canada Mortgage and Housing Corporation show housing construction, in the country's six biggest metropolitan areas, increased by a mere 1.0% in the first half of 2023, compared to a year earlier. That small increase was driven by apartment starts which were up 15% (48,029 units) for the period. All other categories were down. Row house starts dipped 17%, semis dropped 22% and the benchmark, detached single-family home fell 25%.
Two markets dominated the numbers. Toronto and Vancouver accounted for nearly two-thirds of the starts with increases of 32% and 49%, respectively. Montreal took the biggest hit with a 58%, overall decline.
In a previous report CMHC said that by 2030 Canada needs to build 3.5 million additional housing units, over and above the 2.3 million that are already forecast, in order to meet the expected demand.
The housing agency says high interest rates, reduced access to credit and elevated costs for construction and labour have put homebuilders in a tough spot. That has led to a reduction in project starts and an increase in completion times.
CMHC says it expects the economic challenges to take an even bigger bite out of building starts through the second half of the year, with starts dropping back to levels seen last year. The agency also expects to see an ongoing increase in demand for rental housing driven by record high levels of immigration and the ever-rising barriers to home ownership, including high prices and high interest rates.