Why hasn’t the boom in Canadian condo construction led to a decrease in rent prices?

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The Canada Mortgage and Housing Corp. (CMHC) reports that construction of new homes in Canada’s six largest cities remains at historically high levels, yet demand continues to outstrip supply, prompting a call for urgent action to address the shortfall. “We need everything,” emphasized Aled ab Iorwerth, deputy chief economist at the CHMC, in an interview with CTV News Channel. “More apartments are particularly helpful, they’re essential for people getting into homeownership.” Despite a record high in apartment construction, ab Iorwerth stressed that it falls short of meeting the demand. He highlighted challenges in financing new housing starts, citing high interest rates, labor shortages, and material costs as contributing factors, leading to pressure on detached housing starts, especially in cities like Montreal. The housing crisis and supply shortage are driving a shift in housing preferences, with Ab Iorwerth describing a move away from single-detached homes due to affordability constraints. He emphasized the necessity for more rental buildings to accommodate the growing demand as homeownership becomes increasingly unattainable for many. Concerns about the impact of high interest rates on housing starts were also raised, with Ab Iorwerth warning that the trend might extend to apartment construction in 2024, potentially exacerbating the housing crisis. He stressed the urgent need for more condominiums and apartments to address affordability challenges and accommodate population growth.

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