In a concerning trend for the Canadian housing market, housing starts across the nation have fallen by seven percent in 2023, a development that underscores the growing challenges in the real estate sector. This decline is largely attributed to higher interest rates and a weakening economy. However, the Greater Toronto Area (GTA) presents a contrasting scenario with a slight increase in housing starts, primarily driven by condominium projects.
According to the Canada Mortgage and Housing Corporation (CMHC), this increase is due to a lag in the impact of interest rates locally, setting the GTA apart from the national trend.
Economist Mike Moffatt expressed concern over the situation, emphasizing the shortage of necessary housing supply. “We’re just not seeing the supply built that we need,” Moffatt said, pointing out the real implications of this trend. He attributes the decline in housing starts to the current economic climate marked by rising borrowing costs and overall economic sluggishness. These factors have resulted in a dampening of construction activity and hesitancy among developers to embark on new projects, while potential homeowners are becoming increasingly cautious due to economic uncertainty.
This decrease in housing starts across Canada, juxtaposed with the unique situation in the GTA, highlights the complexities facing the country’s housing market. It also underscores the need for targeted strategies and policies to stimulate housing construction and address the growing demand, ensuring a stable and responsive housing market in the face of economic headwinds.
