Housing supply has been top-of-mind across Vancouver for many months as housing advocates, politicians and experts look to meet the demand for affordable housing.
New data from the Canada Mortgage and Housing Corporation (CMHC) shows that in the long-term, housing starts in Metro Vancouver have declined. However, the month of September is showing promise with the seasonally adjusted annual rate (SAAR) being the highest in Canada since November 2021.
All of the increase is in rental apartments, which reached 1,481 units in the month.
According to CMHC, total housing starts for Metro Vancouver declined 23 per cent in the first half of 2022 compared with the same period in 2021. The decline was most pronounced in the condominium market.
As of September, total starts of strata properties (condo apartments and townhouses) in Metro Vancouver were down 36 per cent compared to the first 10 months of 2023, at 8,480 units.
Eric Bond, senior specialist for market analysis with CMHC, said it is important to bear in mind that last year saw a period of heightened construction.
“Nonetheless, we note the important decline in condominium construction that flows from the higher interest rate environment, the higher inflation environment, the difficulty in obtaining construction materials and labour, all of which is leading developers to take a more cautious approach to condominium construction,” he said.
In contrast to condos, rental starts reached a multi-decade high. Starts increased by 18 per cent for the first half of 2022 when compared with the same period last year.
“August and September were quite strong months, meaning the third quarter was strong overall as well. And, so, we've actually seen a further increase in construction of both rentals and condos in Metro Vancouver during that time, which has narrowed that year-to-date gap to 10 per cent for the first nine months of the year compared with the first nine months of the year last year,” Bond said.
Bond noted that this period is seeing the highest amount of rental construction since the 1970s, when a lot of the rental stock was built across Canada. This is renewing Vancouver's rental stock and providing more opportunities for affordable housing.
CMHC also said that, while construction costs are still increasing, the pace of increases appeared to have stalled in the second quarter of 2022. This is due to a turnaround in the supply of construction labour which is offering more choices to builders and reduces the upward pressure on wages, according to housing agency’s report.
“In terms of the outlook, we are projecting a slight contraction in housing starts next year for 2023. But the level of construction would still be at a level above the 10-year average,” Bond said.
