The Canada Mortgage and Housing Corp. (CMHC) says construction of new homes in Canada’s six largest cities remains near an all-time high.
However, demand is still outpacing supply, with the spokesperson for the agency warning that the country needs a lot more, and fast.
“We need everything,” Aled ab Iorwerth, deputy chief economist at the CHMC, told CTV News Channel on Wednesday. “More apartments are particularly helpful, they’re essential for people getting into homeownership.”
It comes amid a new survey of business leaders, who see the housing crisis as the biggest risk to Canada’s economy, and after fresh pledges from the federal government to protect renters.
‘We need a lot more’
Although the construction of apartments has hit an all-time high, which ab Iorwerth says is good news, it’s not enough.
“Obviously these are relatively more affordable units,” he told Todd van der Heyden in a one-on-one interview. “We just need a lot more.”
ab Iorwerth also indicated that financing for new housing starts is becoming more complicated, partially because of high interest rates but also because of “labour shortages and the cost of materials.”
That’s leading to pressure on detached housing starts, according to ab Iorwerth.
“That’s why the picture in Montreal doesn’t look so good,” he explained. “They tend to have these smaller structures.”
Shift to condominiums is ‘inevitable’
The housing crisis and lack of supply is also causing a shift in how Canadians are choosing to live, a change that ab Iorwerth characterizes as “inevitable.”
“Single, detached, just simply too expensive,” he said.
Even though the COVID-19 pandemic saw a surge of prospective homeowners moving to the “outer suburbs” where they could afford detached homes, ab Iorwerth warns that many are returning to city centres – and apartments are key to accommodating the influx.
“Frankly, we particularly need a lot more rental buildings to be built,” ab Iorwerth says. “Home ownership … is just becoming out of reach.”
‘Interest rates are becoming an issue’
ab Iorwerth also raised a growing concern at the CMHC – the impact that high interest rates are having on housing starts.
“Our running hypothesis is that higher interest rates had a real effect on those single detached starts,” he says. “Apartments are offsetting that.”
However, that may not last, according to ab Iorwerth, who is worried that high interest rates are going to have the same effect on apartment starts in 2024.
He also warned that stagnating growth will have a spillover effect on Canada’s housing crisis, which desperately needs “more condos, more apartments” and more density, “because it’s just too expensive.”
With files from the Canadian Press