Millions of new homes are required to restore housing affordability in Canada by 2030 – but rising interest rates saw housing starts fall by around 30,000 units in 2023, according to modelling from the national housing agency.
That means the pace of new home construction likely slipped by between 10% and 15% year over year, Canada Mortgage and Housing Corporation (CMHC), as deputy chief economist Aled ab Iorwerth highlighted significant challenges in both the immediate and longer terms for housing.
While the short-term impacts of higher interest rates were reflected in the muted full-year estimates, ab Iorwerth also emphasized the “critical long-term housing shortages” weighing against the outlook.
A sluggish current economic outlook is weighing against home construction prospects, with the willingness of individual buyers and investors to borrow money directly impacting the pace of new construction, particularly in the condo market.
2023’s decline in housing starts affected the new construction of condo buildings across much of the country, except for Alberta, where the strong economy bolstered demand.
