Housing construction commencement in Vancouver plummeted by 42% compared to the same period last year, indicating a significant rise in building costs, as per an industry advocate. Mike Drummond, CEO of the Urban Development Institute, highlighted the current housing market as the most challenging in the past three decades.
A housing start denotes the initiation of construction on a dwelling, marked when concrete is poured into its foundation, as defined by the Canada Mortgage and Housing Corporation (CMHC). Vancouver’s decline in July stands in sharp contrast to other major cities in Canada. Toronto witnessed a 10% decrease in housing starts, whereas Montreal saw a 3% increase during the same period.
Vancouver recorded 1,810 housing starts in July, while Toronto and Montreal reported 1,540 and 2,458 starts, respectively. Tania Bourassa-Ochoa, CMHC’s deputy chief economist, noted that multiple markets, notably Vancouver, Calgary, and Toronto, are experiencing a slowdown in new project commencements. She anticipates subdued housing starts in the upcoming months due to ongoing challenges in launching new developments.
Drummond emphasized the urgency to reduce construction expenses, citing that building costs have doubled since 2015. He called for lower taxes and fees in the housing sector to stimulate market growth. Additionally, he mentioned the upcoming expiration of Canada’s foreign homebuyer ban in 2027, suggesting that Canada might adopt Australia’s approach to managing foreign buyers.
Andy Yan, director of Simon Fraser University’s City Program, emphasized the ongoing affordability issues highlighted by CMHC’s findings. He raised concerns about the lack of affordability for local residents in Vancouver’s existing housing stock, with approximately 70% of unsold condo units priced over $1 million.
Yan responded to Drummond’s cost reduction proposal by pointing out that each housing unit requires an estimated $107,000 worth of infrastructure to be developed. He questioned how this infrastructure should be funded. Yan cautioned against blindly copying Australia’s foreign homebuyer policies without thorough analysis, emphasizing the need for comprehensive data-driven decision-making.
In conclusion, the current housing market challenges in Vancouver underscore the need for strategic planning and policy adjustments to address affordability concerns and stimulate construction activity.
