Housing starts stable in 2023, but demand still outpaces growing supply of apartments – MoneySense

The agency released its biannual housing supply report on Wednesday, which showed combined housing starts in the Toronto, Vancouver, Montreal, Calgary, Edmonton and Ottawa regions dipped 0.5% compared with 2022, totalling 137,915 units.

That was in line with the annual average of around 140,000 new units over the past three years. CMHC deputy chief economist Aled ab Iorwerth said the 2023 numbers came in “better than we thought.”

“We ended up being positively surprised by 2023. We were really quite concerned that higher interest rates were going to really have an impact,” said ab Iorwerth.

“They did have an impact, but it seems to have been on smaller structures, single-detached (homes) and so forth.”

Apartment starts grew 7% to reach a record 98,774 individual units last year. However, those gains were offset by declines in the number of new single-detached homes, which fell 20% year-over-year, due to weaker demand for higher-priced homes in an elevated mortgage rate environment.

More housing needed to address affordability gaps

The agency continued to warn about the need to ramp up housing construction to address affordability gaps and significant population growth in Canada.

It said housing starts are projected to decrease in 2024, despite the CMHC’s forecast that Canada will require an additional 3.5 million units by 2030, on top of what is currently projected to be built, to restore affordability to levels seen around 2004.

Its report cited rising costs, larger project sizes and labour shortages last year that led to longer construction timelines, prompting various levels of government in Canada to announce new programs aimed at stimulating new rental housing supply.