Developers increase housing starts by 4% in Canada's top markets, focusing on rental construction
The latest Housing Supply Report (HSR) from Canada Mortgage and Housing Corporation (CMHC) reveals that housing starts in Canada’s six largest census metropolitan areas (CMAs) increased by 4 percent in the first half of 2024 compared to the same period in 2023.
A total of 68,639 housing units were started, up from 65,905 units in the first half of 2023. Calgary, Edmonton, and Montréal led this growth, driven primarily by significant increases in rental construction.
Developers continued to focus heavily on multi-unit apartment buildings. In the first half of 2024, apartment starts totalled 49,172 units, making up 72 percent of all new home construction in these cities.
Of particular note, rental housing construction – fuelled by various government policies and incentives – accounted for 47 percent of apartment starts, the highest share on record. This translated to over one-third of total housing starts.
Montréal led this rental construction boom with a 106 percent increase, resulting in 7,192 new rental units, the highest among the six markets.
Despite these increases in apartment construction, other parts of the housing market saw varied results. Calgary and Edmonton set new records for housing starts, with Edmonton posting the second-highest level on record.
Single-detached housing saw strong growth in these two cities as well. Conversely, housing starts declined in Toronto, Vancouver, and Ottawa, particularly for condominiums.
High financing costs and lower demand made pre-construction apartments less appealing to investors, especially in Toronto and Vancouver.
Developers also shifted their focus to clearing backlogs of projects already under construction, which led to a surge in apartment completions across all six CMAs, except for Montréal and Vancouver.
However, despite these efforts, per-capita housing starts remained flat compared to the same period last year, meaning the rate of new construction failed to keep pace with population growth, raising concerns about housing supply and affordability.
Aled ab Iorwerth, deputy chief economist for CMHC, said, “The growth in actual starts observed in the first half of this year is encouraging, considering the tighter financing conditions and higher construction costs faced by homebuilders.”
He continued, “With record low vacancy rates in Canada's largest cities, the increased investment by the private sector, leading to a rise in rental construction, was much welcomed. However, per-capita housing starts remain a concern, as supply did not rise enough to keep pace with demand and improve overall affordability.”
Municipalities and provinces are actively working to address this supply-demand challenge. Efforts to increase the overall housing supply and offer a greater variety of housing types remain ongoing, even amid regional differences in new home construction.
