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6mo ago

Higher Interest Rates Cut Canadian Housing Starts by 30,000 Units in 2023

The CMHC reports a significant slowdown in new condo construction due to elevated interest rates, despite some offset from supportive policies.

A report by Canada Mortgage and Housing Corp. says higher interest rates decreased housing starts by about 30,000 units in 2023.New homes are built in Ottawa on Monday, Aug. 14, 2023.THE CANADIAN PRESS/Sean Kilpatrick
Housing starts in Canadian centres of 10,000 population and over were down seven per cent in 2023, CMHC said.

Overview

  • Canada experienced a 10 to 15 percent reduction in housing starts last year, attributed to higher interest rates.
  • The construction of condo buildings was particularly impacted, except in Alberta where starts remained steady.
  • The Bank of Canada's interest rate hikes in 2022 and 2023 were aimed at controlling inflation, leading to reduced housing activity.
  • Although mortgage rates have begun to decline in 2024, the long-term housing shortage remains a critical issue.
  • CMHC emphasizes the need for private sector investment and government support to boost housing supply amid economic fluctuations.