Canadian builders have shown declining interest in taking on new projects, as productivity on build starts has dropped for the eighth consecutive quarter, according to a new survey.
The Canadian Home Builders Association published its second quarter survey called the Housing Market Index, indicating the present and future health of Canada’s residential construction industry.
The HMI survey assesses the current selling market and expectations for selling conditions over the next six months as well as buyer interest and the association said its findings “continue to reflect broadly negative views about the health of new home sales.”
“The single-family HMI recorded a score of 29.9 (out of 100), which is 5 points lower than in the previous quarter and 10 points lower than in Q2 2023,” reads the survey.
“The second quarter 2024 multi-family HMI score is 32.5, which is 5.4 points lower than in the previous quarter and 8.5 points lower than Q2 from a year ago. These latest results indicate that builder sentiment has been downbeat for two full years.”
The CHBA also noted that the full effects of interest-rate-driven sales have yet to be felt, given the differences in building timelines and builders’ reliance on sales so they can secure financing.
British Columbia and Ontario appear to be the provinces where builders are less optimistic about the prospects of building, the problem is further exacerbated by the fact that the two also represent the majority of new starts for this year.
The CHBA called the situation “very problematic,” finding that “urban starts overall are down 15% in Ontario and 7% in British Columbia year to date.”
However, the Prairies and Atlantic Canada are proving to have a more positive sentiment when it comes to building, despite holding only a minor share of new starts, the regions are rebounding from record lows in 2022.
The CHBA credits regional affordability for the positive change in trends as less expensive regions are poised to benefit more from builders’ interest.
Still, Canada’s home builders have cut their future plans in half, with 61% now building fewer home starts in 2024, compared to last year, with the bulk of respondents citing increased interest rates as being the main culprit in their decision-making.
“Canada is trading off housing units for rent rather than to own, and not getting much more overall supply, reflecting the challenges with affordability and homeownership,” reads the survey.
“It is only by enabling young and new Canadians to enter homeownership that we can move towards increasing housing supply dramatically, as is required to close the 3.5 million housing supply gap identified and reaffirmed by the Canada Mortgage and Housing Corporation. We need policies that support more rental and more ownership units to restore affordability.