In 2024, Canada’s housing market experienced a modest uptick, with housing starts increasing by 2% compared to the previous year. According to the Canada Mortgage and Housing Corporation (CMHC), the nation saw 245,120 housing starts, up from 240,267 in 2023. This growth signals a steady push to address housing demand, especially in urban centers where affordability remains a pressing issue. Builders are ramping up projects despite challenges like labor shortages and material costs, aiming to keep pace with the country’s demand for new homes.
Where growth is happening
This growth was primarily driven by heightened construction activity in Alberta, Quebec, and the Atlantic provinces. Notably, while these regions saw gains, the country’s six largest metropolitan areas collectively experienced a 3% decline in housing starts. Cities like Vancouver, Toronto, and Ottawa faced decreases, whereas Calgary, Edmonton, and Montreal reported increases.
Why this benefits consumers and builders
For consumers, this rise in housing starts is promising. An increase in housing supply can alleviate some of the pressure on home prices, potentially making homeownership more attainable for many Canadians. Additionally, a more active housing market offers consumers a wider array of choices, catering to diverse preferences and needs.
Builders and developers also stand to benefit from this trend. The uptick in construction activity suggests a healthy demand for new homes, providing opportunities for growth and expansion within the industry. Moreover, sustained construction activity can lead to job creation and economic stimulation in related sectors, such as manufacturing and services.
Will this continue into 2025?
Looking ahead to 2025, the housing market presents a mixed outlook. While the CMHC has emphasized the need for an additional 3.5 million housing units by 2030 to restore affordability, current projections indicate that Canada could potentially build up to 400,000 new housing units annually if construction resources are maximized. However, economists anticipate only a modest 1% increase in average home prices for 2025, slightly below the overall inflation forecast of 2.5%. This suggests that while construction activity may continue, demand could remain subdued due to ongoing affordability challenges.
Challenges that could impact future growth
While the increase in housing starts is a positive sign, several factors could slow momentum in the coming years. Labor shortages remain a significant concern, as the construction industry struggles to find skilled workers to meet demand. Rising material costs and supply chain disruptions also continue to impact project timelines and budgets, making it harder for builders to ramp up production.
Government policies and interest rates will also play a role in determining future growth. While some provinces have introduced incentives to boost housing supply, stricter zoning regulations and permitting delays can create roadblocks. Additionally, if interest rates remain high, potential buyers may hesitate to enter the market, reducing demand and slowing construction.
Despite these challenges, industry leaders remain hopeful that continued investments in housing will help address Canada’s ongoing supply shortage. By streamlining regulatory processes and expanding workforce development programs, there is potential for further growth in 2025 and beyond.
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