Housing construction initiations in Vancouver have declined by 42 percent compared to the previous July, indicating a significant rise in building costs, as stated by a development advocate. Mike Drummond, CEO of the Urban Development Institute, expressed that this housing market downturn is the most severe in three decades.
According to the Canada Mortgage and Housing Corporation (CMHC), a housing start is marked when concrete is poured into a foundation, signifying the commencement of residence construction. In July, Vancouver witnessed 1,810 housing starts, a notable drop from Toronto’s 1,540 and Montreal’s 2,458 housing initiations during the same period.
Tania Bourassa-Ochoa, CMHC’s deputy chief economist, observed that Vancouver, Calgary, and Toronto are among the cities where fewer new projects are commencing. She anticipates that housing starts will continue to be subdued in the upcoming months due to obstacles in launching new projects but mentioned that the existing high volume of homes under construction will contribute to the housing supply.
In response to the current situation, Drummond emphasized the necessity to lower construction expenses by reducing taxes and fees on housing. He elaborated that construction costs have surged, with the price of constructing a building in 2015 being around half of what it is today.
Andy Yan, director of Simon Fraser University’s City Program, highlighted the persistent affordability challenges in Vancouver, noting that a large percentage of unsold condo units are priced over $1 million, making them unaffordable for local residents. Yan stressed the importance of considering who should bear the approximately $107,000 worth of infrastructure costs required for each housing unit to be operational.
Yan cautioned against simply emulating Australia’s approach to foreign homebuyers and advocated for careful consideration and the need for more data before adopting similar practices. He emphasized the importance of not repeating past mistakes that led to the current housing market conditions.
The discussion around the declining housing starts in Vancouver has sparked conversations on affordability, construction costs, and the impacts of foreign homebuyer policies, raising questions about the accessibility of homes for local residents.