The 2024 Q2 Housing Market Index (HMI) results from the Canadian Home Builders’ Association (CHBA) revealed a further decline in builder sentiment compared to the previous quarter in key Canadian regions.
CHBA’s report indicates that new home sales figures suggest no significant increase in housing starts activity in the near future. Of particular concern are the record-low HMI scores 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), coupled with the significant affordability challenges and the need for more housing supply in these provinces.
The association also highlights that the full impact of the slowdown on housing starts is yet to be fully realized due to long building timelines, especially for multi-family structures.
Over 60% of builders anticipate half the housing starts in 2024 compared to 2023
Nationally, 48% of HMI respondents mentioned that challenges with mortgage qualifications for customers have led them to build fewer units than they would have otherwise, while 22% cited project cancellations due to lack of sales. 61% of respondents expect an average of half the number of housing starts this year compared to 2023.
“The declining interest rate environment alone is insufficient to offset the restrictive mortgage rules affecting buyers’ ability to afford homes at current prices. Canada requires both increased housing supply and revisions to mortgage rules to stimulate the construction of that supply,” said CHBA CEO Kevin Lee.
‘Much more policy change is needed to stimulate housing supply momentum’
Lee emphasized, “If buyers cannot access better mortgage options and municipalities do not reduce development taxes and address barriers to home building, the ongoing housing shortage will worsen in many regions, leading to further price increases. Extensive policy changes are necessary to facilitate housing supply momentum.”
‘Every level of government must address this issue comprehensively’ — what’s still required?
As of August 1, first-time buyers of new construction homes can benefit from 30-year amortizations on insured mortgages, which Lee views as a crucial measure to assist qualified individuals in entering the market. However, he emphasized the need for further mortgage relief, such as expanding 30-year amortizations on all insured mortgages for new construction.
“We also need adjustments to the mortgage stress test to make it dynamic and lower it at higher rates. Every level of government must address this issue comprehensively and collaboratively,” he stressed.
For additional information on CHBA’s HMI, including detailed methodology and key insights, visit here.
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