Housing construction activity in Vancouver witnessed a significant decline of 42 percent in July compared to the same month last year. This decline, as stated by a representative of the development sector, reflects the escalating costs associated with new housing projects.
According to Mike Drummond, CEO of the Urban Development Institute, the current housing market downturn is the most severe seen in the past three decades, impacting both individuals and their incomes. A housing start, defined by the Canada Mortgage and Housing Corporation (CMHC) as the initiation of construction when concrete is poured into a foundation, marks the commencement of a residential project.
In contrast to Vancouver’s substantial drop, other major Canadian cities experienced varying trends in housing starts during the same period. While Toronto witnessed a 10 percent decrease, Montreal saw a modest increase of three percent, according to CMHC data. Vancouver recorded 1,810 housing starts in July, whereas Toronto and Montreal had 1,540 and 2,458 starts, respectively.
Tania Bourassa-Ochoa, CMHC’s deputy chief economist, highlighted the slowdown in construction activities in several markets, notably Vancouver, Calgary, and Toronto. She emphasized that due to the recent deceleration, housing starts are expected to remain subdued in the upcoming months, reflecting persistent challenges in bringing new projects to the market. Nevertheless, the existing substantial housing under construction will continue to contribute to the housing supply.
To address the situation, Drummond emphasized the necessity to reduce construction expenses and advocated for lower taxes and fees on housing. He also pointed out that Canada’s ban on foreign homebuyers is set to expire in 2027, suggesting that emulating Australia’s approach towards foreign buyers could offer valuable insights.
Andy Yan, director of Simon Fraser University’s City Program, commented on the ongoing affordability concerns highlighted by the CMHC findings. He noted that a significant portion of unsold condominium units in Vancouver are priced above $1 million, indicating a mismatch between the affordability of homes and local incomes.
Yan also raised questions about the costs associated with bringing each housing unit online, estimated at around $107,000 for infrastructure such as roads, sewage, and water. He emphasized the need to determine how to provide this infrastructure and who should bear the costs.
Regarding the discussion on foreign homebuyer policies, Yan cautioned against blindly adopting practices from other countries, emphasizing the importance of comprehensive data analysis and a nuanced approach rather than replicating strategies that may have contributed to the current housing challenges in Canada.
