Housing construction reached a 26-year low in the first half of 2023 in Montreal, which became the major Canadian city with the worst record in terms of residential starts.
This is what emerges from a report from the Canada Mortgage and Housing Corporation (CMHC) published Thursday. We learn that residential starts increased by an average of 1% in the six main Canadian metropolitan areas. But also that significant disparities exist.
Thus, while the number of residential starts “well exceeded” the levels reached on average over the last five years in the Vancouver and Toronto regions, it fell by 58% in Montreal, where 5,927 housing units began construction. emerge from the ground during the first six months of the year.
“The number of construction starts has never been so low in Montreal in the first half of the year for 26 years,” notes the CMHC. “It has fallen sharply for all types of housing, including condominiums and rental apartments. »
This decline particularly affects the rental market. A situation that arises at a time when rent increases reached a 20-year high last year in the greater Montreal region, which also saw its vacancy rate tighten. However, such a reduction in the number of construction starts “creates pressure on sales prices and rents,” notes economist Francis Cortellino of CMHC.
Joined by The Dutyr, the head of housing on the executive committee of the City of Montreal, Benoit Dorais, said he was worried about this situation. “It is certain that this concerns us, and that is why we have been working for several months to speed up approvals and [réduire] the costs for developers,” argued the elected representative from Projet Montréal in writing.
A particular context
Meanwhile, in the Toronto region, “we are heading towards a record number of construction starts,” notes Francis Cortellino.
To explain the dichotomy between the country’s two largest cities, the economist evokes several factors. On the one hand, in Montreal, developers largely build low or medium density real estate projects, which are often approved in the same year in which they are proposed. The number of construction starts reported in the first six months of the year therefore accurately reflects the current economic situation in the metropolis.
Conversely, in Toronto and Vancouver, it is rather large residential towers, whose approval can take a few years, that are built. Thus, the construction starts that have been noted there in recent months would not yet take into account the impacts that the increase in construction costs and interest rates have had on the real estate market, explains Mr. Cortellino.
But it’s only a matter of time, the economist predicts. “Toronto and Vancouver will eventually be caught up in these conditions too. »
On the other hand, the Montreal real estate market depends more on rental construction than Toronto and Vancouver, where condominiums are popular. However, “it is much more difficult to make rental projects profitable than co-ownership projects” in the current economic context, notes Mr. Cortellino. Several developers will thus “delay or cancel” some of their rental real estate projects in Montreal, adds the economist.
In this context, “for projects to take off, we need to invest more in the current economic context and all stakeholders must push in the same direction for us to get there,” insists Benoit Dorais, thus calling on Quebec and Ottawa. The Montreal elected official also assures that measures “aimed at accelerating housing projects will be unveiled in the coming months” by the City, in the hope that the metropolis remains an affordable city.