A robust pace of homebuilding in the first half of 2024 won’t be sufficient to restore housing affordability, according to the Canada Mortgage and Housing Corp.
The CMHC said in a new housing supply report Thursday that total housing starts in Canada’s six largest cities rose four per cent in the first half of the year compared with the same period in 2023.
The 68,639 units started marks the second strongest levels since 1990, short only the first half of 2021, CMHC said.
Despite the overall national lift in the first half of the year, differences in construction activity were also highly regional.
Growth was led by Calgary, Edmonton and Montreal, CMHC said, with starts up 40 to 70 per cent year over year in those cities. Conversely, Toronto, Vancouver and Ottawa all saw drops in their annual pace of 10 to 20 per cent.
These disparities weren’t observed in CMHC’s previous housing supply report, the agency noted.
Calgary and Edmonton in particular are seeing homebuilding paces accelerate because they benefit from strong flows of interprovincial migration, CMHC said.
“The influx has created demand for new home construction, with housing starts reaching record highs in Calgary and the second-highest level in Edmonton during the first half of 2024,” the report said.
CMHC pointed to a “lower regulatory burden” in Alberta as helping builders quickly get shovels in the ground to try to keep up with demand.
But despite the national uptick, CMHC is warning that the current pace is not enough to keep up with Canada’s rapidly growing population.
Looking at housing starts per 10,000 population, homebuilding activity is just holding to historical averages, the agency said.
“Given the long history of supply not keeping up with demographic demand, this level of activity isn’t enough to reduce the existing supply gap and improve affordability for Canadians,” CMHC said.
Fresh population figures released Wednesday from Statistics Canada showed that growth slowed in the second quarter of the year as the federal government seeks to tighten the flow of newcomers to the country.
Canada added some 250,000 new residents in the second quarter of 2024, up 0.6 per cent on a quarterly basis, marking a slowdown from the same periods in 2022 and 2023.
BMO chief economist Doug Porter said in a note to clients Thursday morning that despite the slowing inflows, taken with the pace of housing starts, Canada’s latest population figures suggest housing supply tightened further last quarter.
Up until recently, Canada had maintained an equilibrium of adding one new dwelling per two new residents for 30-plus years, Porter explained.
But in the past five years, that ratio has fallen to one start per every three residents, with the last quarter nearing one in four.
“Not heading in the right direction for improved affordability … quite the opposite,” Porter wrote.
