Apartment construction surged last year but demand still outpacing supply, says CMHC

A surge in new apartment construction drove housing start increases in some major Canadian cities last year, but demand continues to outweigh supply, according to a report released Wednesday by the federal housing agency.

The report from Canada Mortgage and Housing Corporation focuses on six major cities: Toronto, Montreal, Vancouver, Calgary, Edmonton and Ottawa. Their combined housing starts dipped 0.5 per cent compared with 2022, totalling 137,915 units, as apartment starts grew seven per cent, to reach a record 98,774 units.

That number was offset by declines in the number of new single-detached homes, which fell 20 per cent year over year, due to weaker demand for higher-priced homes in an elevated mortgage rate environment.

«We ended up being positively surprised by 2023. We were really quite concerned that higher interest rates were going to really have an impact,» said CMHC deputy chief economist Aled ab Iorweth.

«They did have an impact, but it seems to have been on smaller structures, single-detached [homes] and so forth.»

Toronto, Vancouver, Calgary break records

Toronto, Vancouver and Calgary all saw an increase in total housing starts boosted by record-high levels of apartment construction.

Montreal, meanwhile, saw a 35 per cent decline in apartment starts due to higher financing and construction costs — its lowest level in eight years, according to CMHC. It was the only market with a significant decrease in new homes being built across all housing types.

Ottawa and Edmonton saw drops in total starts, with the former logging a 20 per cent decline and the latter a 10 per cent decline. Yet apartment starts in Ottawa reached their highest level since the 1970s, according to the report.

Purpose-built rental construction