A new report by the Canadian Home Builders Association (CHBA) found that nearly a quarter of Canadian builders reported having to cancel projects this year due to red tape and current economic conditions.
According to the CHBA’s, the housing shortage is only getting worse as 22% of home builders reported cancellations of projects after the Bank of Canada hiked its interest rate.
Canada needs to build 5.8 million homes over the next decade, according to CHBA CEO Kevin Lee, should it hope to meet housing demand.
“We need to build 5.8 million homes within the next ten years to close Canada’s current housing supply gap. Current conditions – with construction costs rising, labour shortages, and especially the current financing conditions – are preventing that from happening,” said Lee.
“Canada needs a holistic approach to increasing housing production. There are measures the federal government can take to offset the impact of high interest rates on new home construction, and they need to be taken; all levels of government need to take action to remove barriers and support more housing supply.”
According to the Housing Market Index for the second quarter of 2023, there was a slight increase in activity but both indexes tracked by the score for single and multi-family homes remained low overall.
“A pause from the Bank of Canada on increasing interest rates between late January and June of this year, allowing buyers time to adjust to the new financing environment, along with the spring buying season, was supportive of improvement in builder sentiment, though the June and July interest hikes will no doubt keep improvement muted,” wrote the CHBA.
The organization also found that nearly half of buyers reported looking for alternative lending so they can close a deal on a house.
According to Statistics Canada’s latest labour force survey, the construction industry lost 45,000 jobs in July. That was preceded by a loss of 14,000 jobs in June.
“In construction, employment decreased by 45,000 (-2.8%) in July, following a smaller decline of 14,000 (-0.8%) in June. Since January 2023, employment in construction decreased by 71,000, offsetting cumulative increases of 65,000 from September 2022 to January 2023. In July, the decline was concentrated in British Columbia (-21,000), Quebec (-11,000) and Ontario (-9,000),” Statistics Canada reported.
