Homebuilding surge in some Canadian cities to start 2023 may not last: CMHC
Higher borrowing costs are expected to drive drastic slowdowns in homebuilding for Canada’s largest urban centres after a surge in activity that started the year, according to the Canada Mortgage and Housing Corp.
The CMHC’s mid-year housing supply report released Thursday shows Canada’s six largest housing markets had wildly different paces of homebuilding in the six months of the year.
Vancouver and Toronto saw their paces of homebuilding surge 49 per cent and 32 per cent compared with the first half of 2022, the agency said. These two metropolises accounted for two-thirds of all housing starts in Canada’s six biggest cities over the first six months.
That compares with a sharp drop of 58 per cent for new housing starts in Montreal. Ottawa and Edmonton also saw annual declines, with Calgary holding steady.
Across all six markets, housing starts in the first half were up just one per cent year-over-year, CMHC said.
The difference in the pace of homebuilding between cities like Montreal and the behemoths of Vancouver and Toronto might come down to timing, the report noted.
Buildings in Toronto and Vancouver tend to be taller than developments in Montreal, and they therefore need a longer time frame before construction can begin.
That means that projects in Toronto and Vancouver that had shovels in the ground in the first half of 2023 likely had financing secured in 2022 — before the Bank of Canada’s rapid interest rate hiking cycle had reached its tightest points.
Comparatively, buildings in Montreal with a shorter turnaround time were likely getting their financing more recently, with higher borrowing costs limiting the viability of some projects.
From this lens, CMHC theorized it might only be a matter of time before
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