Housing construction activity in Vancouver has declined by 42% compared to the previous July, indicating a significant rise in the cost of new home development, as stated by a prominent advocate for development. Mike Drummond, the CEO of the Urban Development Institute, expressed concerns on CBC’s On The Coast, labeling the current housing market situation as the most severe downturn in the last three decades. This drop is reflected in the number of housing starts, which mark the commencement of residential construction when concrete is poured into a foundation, according to the Canada Mortgage and Housing Corporation (CMHC).
Vancouver’s year-over-year decrease in July stands in stark contrast to other major Canadian cities. While Toronto saw a 10% decline in housing starts, Montreal witnessed a 3% increase, as reported by the CMHC. The figures show that Vancouver had 1,810 housing starts in July, while Toronto and Montreal recorded 1,540 and 2,458, respectively.
Tania Bourassa-Ochoa, the deputy chief economist at CMHC, highlighted the slowdown in activity in several markets, notably in Vancouver, Calgary, and Toronto. She projected that housing starts are likely to remain subdued in the upcoming months due to challenges in bringing new projects to the market. However, she emphasized that the substantial number of homes already under construction will contribute to the housing supply.
Drummond emphasized the urgency to cut construction costs and reduce taxes and fees on housing to revitalize Vancouver’s sluggish market. He also pointed out that Canada’s ban on foreign homebuyers is set to expire in 2027, suggesting that Australia’s approach to allowing foreign buyers to purchase new properties without inflating the cost of existing stocks could be a viable model.
Andy Yan, director of Simon Fraser University’s City Program, echoed concerns about affordability issues revealed by the recent CMHC report. He noted that a significant portion of unsold condo units in Vancouver are priced above $1 million, indicating a mismatch between what is being built and what local incomes can afford.
Yan raised questions about the infrastructure costs associated with each housing unit, estimated at around $107,000, including roads, sewage, and water. He cautioned against blindly adopting the Australian strategy for managing foreign homebuyers, emphasizing the need for comprehensive data analysis and a tailored approach to address the housing market challenges.
The discussion around Vancouver’s housing market downturn underscores the pressing need to address construction costs, affordability concerns, and infrastructure financing to ensure sustainable development in the city.