CMHC has released the second edition of the Housing Supply Report. According to CMHC, the report provides updates to the first edition of the report which was released in May 2022. The report provides insights into the new housing supply in Canada’s 6 largest census metropolitan areas (CMAs) and provides CMHC economists’ in-depth analysis of housing supply trends.
The Housing Supply Report is part of a series of publications that will be released from 2022 to 2023 and these reports will provide the latest analysis on the extent of supply gaps today and going forward to 2030, says CMHC.
With the release of the report, CMHC states, “Housing supply is key to the housing affordability challenges we see across housing markets. This report highlights housing supply trends across major cities to help us better understand price escalation and housing affordability challenges.”
The CMHC Report found:
- Following a boom in 2021, housing starts in the country’s 6 largest CMAs fell by 5% in the first half of 2022. The decrease in apartment starts was the main cause of this decline.
- Housing starts were mixed across Canada’s largest urban centres. Housing starts in the first half of the year were up in Edmonton, Calgary and Toronto. Declines were seen in Vancouver, Ottawa and Montréal.
- Increases in construction costs and materials shortages were felt across markets. This impacted construction times and affordability.
- The effects of rising interest rates and construction costs could continue to impact housing starts in the coming months.
- Rental construction was generally resilient (except for Toronto), due to the strong demand for rental housing. The higher interest-rate environment meant that developers took a more cautious approach to starting new condominium apartment projects.
Highlights for Canada’s largest centres:
- Housing starts in Metro Vancouver housing declined 23% in the first half of 2022 compared to the same period in 2021. With higher interest rates and home prices easing from early — 2022 highs, we’re seeing a more cautious approach to starting new projects. This is especially the case for condominium apartments.
- Rental apartment starts reached a multi-decade high. Strong demand for rental units, rising rents and a policy environment favourable that favours rental contributed to the increase.
- Construction delays and cost increases weighed on both new and existing projects. A rebound in the supply of construction labour, due to increased migration, will provide some relief in the coming quarters.
- Strong demand stimulated single and semi-detached home construction in Edmonton in the first half of 2022. Condominium construction has also increased, given the recovery in demand in 2021.
- The high vacancy rate has slowed rental apartment starts, which reached a new record in 2021, the highest in more than 30 years.
- Despite the growth in housing starts, some challenges are being experienced during construction. This has led to delays. These delays are evident in the increasing average time elapsed between receiving a permit and starting construction and average months of construction by dwelling type.
- Housing starts continued to be strong for the first half of 2022 across all dwelling types compared to the first half of 2021.
- Apartment starts were higher by almost 30% and took up a higher-than-average share of total new construction.
- The average construction time in Calgary for single-detached homes has been relatively stable over the past 2 decades.
- Toronto recorded the highest number of housing starts in the first half of 2022 across all Canadian urban centres.
- While townhouse and condominium apartment construction increased in Toronto, fewer starts were observed for purpose-built rental apartments.
- Rising interest rates and construction costs are making single and semi-detached homes increasingly less affordable for many Toronto households.
- The level of starts for the first half of the year stayed above the 5-year average level despite the decline in activity.
- A decrease in single-detached and condominium apartment starts pulled activity lower in the first half of 2022 compared to the same period in 2021. Row home and rental apartment starts increased.
- Construction times increased for all dwelling types. Supply chain disruptions and labour constraints may explain the most recent increase.
- Densification is rising at a higher rate inside the greenbelt, but areas outside the greenbelt are also seeing a rise in apartment construction.
- Construction decreased in the first half of 2022, but the pace of housing starts during this period continued to be high when compared to previous years.
- Following a temporary increase, the construction of single-detached, semi-detached and row houses decreased in several areas in Greater Montréal.
- Fewer rental apartments were started on the Island of Montréal, but growth was still recorded in many suburban areas.
- Condominium construction levels remain low throughout Montréal.
View the full Housing Supply Report