Your Business News

Canadian housing starts fall slightly in a sign of possible cooling

July 18, 2022

Authored by RSM Canada LLP

Dawn MacKelvie, CPA, CA shared this article

REAL ECONOMY BLOG | July 18, 2022


Housing starts in Canada fell to 273,800 in May, a 3% drop from April, according to data released by the Canadian Mortgage and Housing Corporation on Monday.

Although housing starts are still much higher than the pre-pandemic era, the slight decline might be a preview of the construction industry in the months ahead.

Canadian housing starts

The decline was spread across all types of housing: urban areas single units (down by 4%), urban areas multiple housing (down by 2%), and rural area housing (down by 7%). Major urban areas including Toronto, Vancouver and Montreal all saw increases in housing starts, driven by large multi-unit complexes.

The June data does not yet reflect the Bank of Canada’s striking 100 basis-point hike in its policy rate last week. With that, we expect construction to cool in coming months as the industry grapples not only with rising costs and supply chain disruptions, but also with rising interest rates that put certain financing options out of reach.

Already, projects have been canceled or delayed, some in the middle of construction. Projects with healthy margins and buffers will go ahead as planned, while some projects that were approved in the midst of the below-zero real interest rate boom in early 2020 to 2021 will not.

This threatens to worsen the housing shortage. For more than a decade, Canada has been underbuilding, resulting in a chronic shortage that has played a part in sky-high housing prices and an affordable housing crisis.

Added to the mix is the entry of millennials into the market and hundreds of thousands of incoming immigrants, all of whom will further strengthen the demand for housing.

So far, construction has remained strong. But if economic headwinds prove too strong and dampen construction, then the government’s promise of doubling the number of homes built over the coming decade would be on shaky ground.

Let's Talk!

Call us at 1 855 363 3526 or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Tu Nguyen and originally appeared on 2022-07-18 RSM Canada, and is available online at https://realeconomy.rsmus.com/canadian-housing-starts-fall-slightly-in-a-sign-of-possible-cooling/.

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

FCR a proud member of RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how FCR can assist you, please call us at 1 855 363 3526

Important Notice:

FCR will now redirect you to CCH Portal where your FCR Client Portal login is located.

Share This