Housing construction initiation in Vancouver has decreased by 42% compared to the same period last year, indicating a significant rise in building costs, as stated by a pro-development advocate. Mike Drummond, CEO of the Urban Development Institute, described the current housing market situation as the most challenging in the past three decades.
Defined by the Canada Mortgage and Housing Corporation (CMHC) as the commencement of building activities when concrete is poured into a foundation, a housing start is a crucial milestone in construction. Vancouver’s decline in housing starts in July stands in sharp contrast to other major cities in Canada. While Toronto experienced a 10% drop, Montreal saw a 3% increase during the same period.
According to CMHC data, Vancouver recorded 1,810 housing starts in July, with Toronto at 1,540 and Montreal at 2,458. Tania Bourassa-Ochoa, CMHC’s deputy chief economist, highlighted the slowdown in various markets, especially in Vancouver, Calgary, and Toronto. She mentioned that the sluggish pace of housing starts is expected to persist due to challenges in launching new projects.
Emphasizing the need for cost reduction in construction, Drummond stressed the necessity of slashing construction expenses and lowering taxes and fees on housing. He pointed out that construction costs have doubled since 2015, urging for immediate action to address the issue.
Discussing the future expiration of Canada’s foreign homebuyer ban in 2027, Drummond suggested considering Australia’s approach as a potential model for managing foreign buyers. In Australia, foreign buyers can purchase new properties but are restricted from acquiring existing properties to prevent inflating prices.
Andy Yan, director of Simon Fraser University’s City Program, raised concerns about the affordability of homes in Vancouver. Yan noted that approximately 70% of unsold condo units in the city are priced over $1 million, highlighting the discrepancy between housing costs and local incomes.
Yan also questioned the allocation and funding of necessary infrastructure, estimating that each housing unit requires around $107,000 worth of infrastructure to be developed, including roads, sewage, and water systems. He advised caution in adopting Australia’s foreign homebuyer model, emphasizing the need for comprehensive data analysis and strategic decision-making to avoid repeating past mistakes.
In conclusion, the downturn in housing starts in Vancouver has sparked discussions about affordability challenges and the necessity of addressing construction costs to revitalize the housing market.