Housing starts in Canada's six largest cities increased by 4% in the first half of 2024 compared to the same period last year, according to the Canada Mortgage and Housing Corporation (CMHC). Despite this growth, construction activity is still not enough to address the country's housing supply gap. Toronto, Vancouver, and Ottawa all saw notable declines in housing starts, with drops between 10-20%, while cities like Calgary, Edmonton, and Montreal experienced significant gains. In total, 68,639 new housing units were started, the second-highest figure since 1990. However, the per capita rate of construction remained around the historical average, highlighting the ongoing challenge of meeting growing demand.
High construction costs and regulatory delays have been persistent issues, particularly in Toronto and Vancouver. Additionally, the high interest rates earlier in the year impacted the construction of condominium apartments, leading to a slowdown. While the Bank of Canada began cutting rates in mid-2024, the effects on the housing market are expected to take time to materialize. The construction of purpose-built rental units has increased, helping to address rental shortages, but the broader housing supply remains insufficient.
In cities like Toronto, the surge in condo completions and lackluster sales activity have compounded the housing challenges. Developers are struggling to meet pre-construction sales targets, slowing new projects. While more rental units are being built, demand for both rentals and ownership properties remains high, with concerns about affordability continuing to grow. The CMHC warns that this situation is unlikely to improve rapidly, given the delays in approvals and financing.
Looking ahead, experts believe that lower interest rates could drive more housing construction. However, the current pace of development is not fast enough to alleviate the housing crisis, and more efforts are needed to close the supply gap, particularly in expensive markets like Toronto and Vancouver.
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