Housing construction activity in Vancouver has decreased by 42% compared to last July, indicating a significant rise in building expenses, as stated by an industry advocate. Mike Drummond, CEO of the Urban Development Institute, described the current situation as the most severe housing market downturn in the past three decades.
The term “housing start” refers to the initiation of building a residence, marked when concrete is poured into a foundation, according to the Canada Mortgage and Housing Corporation (CMHC). Vancouver’s decline in housing starts from July of the previous year contrasts sharply with other major Canadian cities. While Toronto saw a 10% drop in housing starts, Montreal observed a 3% increase during the same period.
In July, Vancouver recorded 1,810 housing starts, while Toronto and Montreal reported 1,540 and 2,458 starts, respectively. Tania Bourassa-Ochoa, deputy chief economist at CMHC, highlighted the slowdown in various markets, particularly in Vancouver, Calgary, and Toronto. She anticipated that housing starts would remain subdued in the coming months due to challenges in launching new projects, although the existing high number of homes under construction would contribute to the housing supply.
Mike Drummond emphasized the urgency to reduce construction expenses by slashing taxes and fees on housing. He also mentioned the upcoming expiration of Canada’s foreign homebuyer ban in 2027 and suggested looking at Australia’s approach to managing foreign buyers, allowing purchases of new properties while restricting investments in existing inventory to prevent price inflation.
Andy Yan, director of Simon Fraser University’s City Program, pointed out the persistent affordability concerns highlighted by the CMHC report. He noted that a significant portion of unsold condo units in Vancouver are priced over $1 million, indicating a mismatch between what is being built and what local residents can afford.
Yan echoed Drummond’s call for decreased construction costs, highlighting the substantial infrastructure investment required for each housing unit to become operational. He cautioned against blindly adopting foreign practices, emphasizing the need for comprehensive data analysis and a cautious approach to avoid repeating past mistakes.
The ongoing debate on housing affordability and construction challenges in Vancouver continues, prompting industry experts and policymakers to explore sustainable solutions for the city’s real estate market.
