Rentals take the lead in metro apartment starts
Condominium starts, by comparison, have fallen 36% so far in 2022 from a year earlier.
Housing supply has been a priority in Vancouver for many months as housing advocates, politicians and experts seek to meet the demand for affordable housing.
New data from the Canada Mortgage and Housing Corporation (CMHC) shows that over the long term, housing starts in Metro Vancouver have declined. However, September is looking promising, with the seasonally adjusted annual rate (SAR) being the highest in Canada since November 2021.
The entire increase was attributable to rental apartments, which reached 1,481 units during the month.
According to CMHC, the total number of housing starts in Metro Vancouver fell 23% in the first half of 2022 compared to the same period in 2021. The decline was most pronounced in the condominium market.
In September, total condominium housing starts (condos and townhouses) in Metro Vancouver were down 36% from the first 10 months of 2023, to 8,480 units.
Eric Bond, senior market analyst at CMHC, said it’s important to keep in mind that the past year has seen a period of increased construction.
“Nevertheless, we note the significant decline in condominium construction which stems from the environment of higher interest rates, the environment of higher inflation, the difficulty in obtaining construction materials and the labor, which are causing developers to take a more cautious approach in building condominiums,” he said.
Unlike condominiums, rental housing starts have reached a multi-decade high. Housing starts increased by 18% in the first half of 2022 compared to the same period last year.
“August and September were pretty strong months, which means the third quarter was also strong overall. And, so, we actually saw a further increase in rental housing and condo construction in the Greater Vancouver during this period, which reduced this year-to-date spread to 10% for the first nine months of the year compared to the first nine months of last year,” Bond said.
Bond noted that this period sees the most rental construction since the 1970s, when much of the rental stock was built across Canada. This renews Vancouver’s rental stock and provides more affordable housing options.
CMHC also said that while construction costs continue to rise, the pace of increases appears to have stalled in the second quarter of 2022. This is due to an upturn in construction labor supply which offers more choice to builders and reduces rising wage pressure, according to the housing agency report.
“In terms of the outlook, we expect housing starts to contract slightly next year for 2023. But the level of construction would still be at a level above the 10-year average,” Bond said.