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Despite fervent calls from Canadian politicians and stakeholders in urban planning and development for increased housing supply, the Canadian Mortgage and Housing Corporation (CMHC) predicts a decline in housing starts for 2024. This anticipated drop is primarily attributed to persistently high interest rates, which have made obtaining financing more challenging for builders and developers, particularly affecting the construction of single-detached homes and apartment complexes. The report suggests that the surge in apartment starts seen in 2023 was likely due to financing secured before interest rates began to rise, highlighting the immediate impact of financial conditions on construction projects.

The housing market in Canada has experienced historically high levels of starts in recent years, with a forecasted recovery expected in 2025 and 2026, reflecting the lagged effect of higher interest rates on new construction. However, the rental market remains a significant concern, with supply failing to match demand, resulting in higher rents and lower vacancy rates. Despite increased rental housing coming onto the market in 2023, CMHC predicts a decrease from the record-high rental apartment construction observed in recent years, exacerbated by factors such as high costs of transitioning from renting to homeownership and significant population growth.

While the outlook varies across different cities and provinces, there are common trends. Cities like Vancouver and Toronto, known for their expensive housing markets, are expected to experience declines in housing starts due to higher construction and financing costs. Conversely, Calgary and Edmonton are anticipated to see strong supply growth driven by high demand and population growth, tightening both rental and resale markets. Ottawa and Montreal are expected to experience modest increases in housing starts, with varying impacts on property prices and rental market conditions driven by factors such as mortgage rates and supply growth. Amidst these dynamics, the country's population continues to grow, raising questions about the ability to keep pace with housing demand, with all eyes eagerly awaiting the next interest rate announcement from the Bank of Canada.

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