Apartment construction surged last year but demand still outpacing supply, says CMHC

A surge in new apartment construction drove housing start increases in several major Canadian cities last year, but demand continues to outweigh supply, according to a report released Wednesday by the federal housing agency.

The report from Canada Mortgage and Housing Corporation focuses on six major cities: Toronto, Montreal, Vancouver, Calgary, Edmonton and Ottawa. Their combined housing starts dipped 0.5 per cent compared with 2022, totalling 137,915 units, as apartment starts grew seven per cent, to reach a record 98,774 units.

That number was offset by declines in the number of new single-detached homes, which fell 20 per cent year over year, due to weaker demand for higher-priced homes in an elevated mortgage rate environment.

Toronto, Vancouver and Calgary all saw an increase in total housing starts boosted by record-high levels of apartment construction.

Montreal, meanwhile, saw a 35 per cent decline in apartment starts due to higher financing and construction costs — its lowest level in eight years, according to CMHC. It was the only market with a significant decrease in new homes being built across all housing types.

Ottawa and Edmonton saw drops in total starts, with the former logging a 20 per cent decline and the latter a 10 per cent decline. Yet apartment starts in Ottawa reached their highest level since the 1970s, according to the report.

Purpose-built rental construction accounted for 42 per cent of all apartment construction in 2023 — reaching a record 41,460 units — which contributed heavily to the total starts.

But high vacancy rates and a rapid increase in the cost of rent have indicated that demand is outpacing supply for these types of properties.