The construction of purpose-built rentals and condominiums hit “record levels” in 2023, data from the Canada Mortgage and Housing Corporation released on Wednesday shows.
According to the CMHC’s Spring 2024 Housing Supply Report, purpose-built rental construction in six major markets combined to hit record levels in 2023. Rentals also accounted for a historically high average share of new construction starts.
“In recent years, purpose-built rentals have constituted a larger share of apartments breaking ground, averaging 42 per cent in 2023,” the report said. Edmonton had the highest share of rentals among new constructions at 80 per cent.
“In Toronto, where condominium apartments still dominate, the rental share increased to over a quarter,” it added.
In the six markets, Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal, condo construction starts also reached historic highs, with 57,121 units in 2023. The report said this was because condo developers were able to sell pre-construction condos in 2021 and 2022.
“During that period, pre-construction investors were particularly encouraged by rapidly increasing rents, price appreciation and the record-low interest rates on the market,” it read.
However, the CMHC is projecting a slowdown in condo construction starts in 2024 due to reduced pre-construction sales in 2023 and increased borrowing costs.
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The report indicated that Canadians may live in more dense accommodations in the future as fewer single-detached homes are being built.
According to the report, apartment starts surged by seven per cent overall, reaching a record high of 98,774 units in 2023. It added: “However, this increase was offset by a decline in the construction of ground-oriented homes. Single-detached starts dropped by 20 per cent the most significant decrease among all housing types.”
This comes after the federal government encouraged municipalities to introduce zoning changes last year, as part of the Housing Accelerator Fund.
In October, Prime Minister Justin Trudeau said “densification” was key to solving Canada’s housing crisis. In September, he also announced the removal of GST on purpose-built rentals. The idea was first put forward as a 2015 campaign pledge by the Liberals, but it had never come into fruition until now.
© 2024 Global News, a division of Corus Entertainment Inc.
