The slowdown in the real estate sector continues to be felt almost everywhere in Quebec. After the falls observed on the resale market, housing starts are also experiencing significant setbacks.
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According to the latest data from the Canada Mortgage and Housing Corporation (CMHC), released yesterday, housing starts fell 8% in July compared to the same period last year.
All types of housing are affected. But none as much as individual residences, down 12% over one year. This is the seventh decline in construction sites since the beginning of the year in the province.
“That doesn’t surprise me. Since the Bank of Canada started raising rates, it’s been total death,” laments Ray Junior Courtemanche, president of Investissement Ray Junior, in Mirabel.
The latter is at the head of several dozen companies, most linked to real estate projects, whether residential, commercial or institutional. Cité Mirabel, SkyBlü Condos and 7SENS are just a few of his achievements in recent years, in the northern suburbs of Montreal.
Chilled banks
But for a few months, he says, everything has been going in slow motion. “Consumers are more fearful, but so are banks. I do business with Desjardins and the seven chartered banks in the country; and I can confirm that none of them are currently lending.
“If the banks are cautious, he continues, how do you expect promoters to be able to finance their projects? In such a context, it is normal for the data to show a drop in housing starts. »
Economist Paul Cardinal of the Association of Construction and Housing Professionals of Quebec confirms the devastating effect of successive interest rate hikes on the industry.
“Rising construction costs, supply issues and labor shortages had already managed to slow residential construction. Now, he says, rising mortgage rates are acting as a drag.”
Sharp drop in Quebec
This decline was mainly felt in four of the six census metropolitan areas (CMAs), in particular that of Québec, down 56% compared to July 2021. The CMAs of Trois-Rivières and Montréal, for their part, experienced drops of 25% and 19% respectively.
Conversely, two regions bucked the trend; that of Gatineau with a jump of 134% in July, and the Saguenay with an increase of 33%.
By way of comparison, across the country, housing starts increased by 3% in July compared to July 2021.