Canadian new housing construction is slowing, but remains above pre-pandemic levels. Canada Mortgage and Housing Corporation (CMHC) data shows new housing starts slowed in January 2022. The number of new homes to start construction fell below last year’s level. Financial institutions forecast this will continue for at least a couple of years.
Canadian New Home Building Is Slowing Down
Canadian housing starts are trending lower, and falling below expectations. The seasonally adjusted annual rate (SAAR) of new home starts fell to 230,754 units in January. It was 3% lower than last year, but 6% lower than forecast expectations. Not as high as the peak reached due to the easy money boom, but elevated above usual.
Canadian New Housing Starts
The seasonally adjusted annual rate of new housing starts across Canada.
Source: CMHC; Better Dwelling.
Yes, Even Cities Are Seeing New Home Construction Slow
Urban starts, those in cities with at least 10,000 people, represent the lion’s share of new construction. In January, the SAAR of urban starts reached 204,428 new homes, down 5% from the previous year. It’s a slow down but 1.0% higher than the market saw in 2020. Once again, this shows a slowdown but still a substantial amount of market activity.
Multi-Family Homes Slow Down But Single-Family Units Increased
New construction of multi-family units appears to be where the slowdown is occurring. The SAAR of new multi-family starts hit 144,332 units in January, down 9% from last year. The SAAR of single-family homes represented the remaining 60,096 units, up 7% over the same period. Easy to see why, with such low single-family inventory in the resale market.
New home building in Canada is down from a record peak, but remains elevated. Fewer builds compared to the frenzy, but still a substantial amount of activity. Desjardins has forecast slowing new construction over the next couple of years. BMO hinted at a similar assessment, saying the recent surge will help satisfy demand for years to come. Though once again, the level of construction is still high — just slowing down from peak.
If demand only exists when interest rates are low, and 1 in 3 homes are bought by investors, does the demand really exist?
1 in 3 resales. Pre-sale developers say up to 50% are bought by overseas investors who unload closer to construction or get a discount close to the NRST.
It’s about 15% higher than usual at this time of year for the cyclical peak outside of the pandemic. This is still a LOT of housing and anyone that says otherwise is delusional.
This is a best case scenario. The demand lowers demand on building resources (labor, materials) and but still getting more housing. Of course, this assumes the gov doesn’t compete for the same resources which they already said they would.
How does a country plan to operate when its prime-earning demographic is fleeing to the country because they can’t afford it, while the city is just boomers who bought while the earth was still cooling down and students who need to be in the city?
https://www.cbc.ca/news/canada/first-person-rural-cottage-1.6329243
Whiskey Foxtrot is right. The Canadian government is mostly responsible for the housing crisis that is driving young talent out of the country. The government needs to implement the following immediately.
First. Transparency International Canada, an agency that is part of the Global coalition agaist corruption, estimates up to 130 billion per year is ‘ Snow Washed ‘ here with much of that going into real estate. We need to enact laws that will stop the flow of dirty money now.
Also, make investing in real estate less attractive . Do not allow many of the current tax write-offs such as mortgage interest and tax investment properties at least 2% per year.
And start the 2 year moratorium on non -residents now. The liberals said they would start this in January. They have not done so.
And, put a much higher vacancy tax than the current 1%. Maybe 5 to 10% will get them to sell. It makes sense most of these vacant homes owners are the money launderers or non-residents.
These policies need action now or we will continue to see the brain drain out of Canada , which is now almost anywhere else on earth.
The 1% tax is a joke. Investors own 28% of housing now.
Darn right! The government has got to tap down the investors . Charge them a lot more per year. At least 5%.