Results from the Canadian Home Builders’ Association (CHBA) 2024 Q2 Housing Market Index (HMI) showed even worse builder sentiment than the previous quarter across key Canadian regions.
CHBA reports that new home sales figures indicate housing starts activity won’t materially pick up in the near future. What’s particularly concerning is the record HMI lows in Ontario (11.6/100 for single and multi-family dwellings) and British Columbia (17.8/100 for single-family and 32.5/100 for multi-family dwellings) combined with the large affordability challenges and need for more supply these provinces face.
The association also points out that the slowdown’s full effects are yet to be felt in housing starts because of long building timelines, especially for multi-family structures.
Over 60% of builders expect half the housing starts this year as were in 2023
Nationally, 48 per cent of HMI respondents stated they’re building fewer units than they otherwise would have as a result of challenges with mortgage qualifications for their customers, while 22 per cent stated that lack of sales has led to the cancellation of projects. 61 per cent of respondents expect an average of half the number of housing starts this year compared to 2023.
“The slowly dropping interest rate environment is not enough to counter the restrictive mortgage rules contributing to buyers’ inability to enter the market with today’s house prices. Canada continues to need both more supply and changes to mortgage rules to help drive the construction of that supply,” says CHBA CEO Kevin Lee.
‘Much more policy change is needed to turn the tides and get housing supply momentum underway’
Lee continues: “If buyers can’t get better access to mortgages, and municipalities don’t lower development taxes and address the barriers to home building, the chronic undersupply of homes will only get worse in many areas of the country, which will drive up house prices again. Much more policy change is needed to turn the tides and get housing supply momentum underway.”
‘Every level of government must tackle this problem from every angle’ — what’s still needed?
As of August 1, first-time buyers of new construction homes can access 30-year amortizations on insured mortgages, which Lee describes as an “important action to help the next generation of well-qualified individuals into the market.” He explains that more relief on the mortgage front is still needed though, through means like expanding 30-year amortizations on all insured mortgages for new construction.
“We also need revisions to the mortgage stress test to make it dynamic and lower it at higher rates. Every level of government must tackle this problem from every angle, in concert,” he stresses.
Get more information on CHBA’s HMI, including detailed methodology and key takeaways.
