Over the 12 months through June, the CMHC reports that there were roughly 108,000 rental unit starts across Canada, nearly double the figure for condo units.DARRYL DYCK/The Canadian Press
Despite a challenging economic environment, national housing starts have held up a lot better than gloomy predictions from analysts. A big reason why? Developers are building loads of rental units.
Over the 12 months through June, there were roughly 108,000 rental unit starts across the country, according to recently published data from Canada Mortgage and Housing Corp., or CMHC. That’s nearly double the figure for condo units, which have seen buyer interest dry up.
Rental construction started to accelerate in the 2010s, with developers drawn to spiking rental rates in urban centres and strong immigration to the country. The numbers have continued to rise over the past two years, even as other development areas recede.
Mike Moffatt, founding director of the Missing Middle Initiative, credited the federal government for this resilience. He pointed to a couple of initiatives from CMHC, such as the Apartment Construction Loan Program, and Ottawa’s decision to scrap the GST from new purpose-built rentals.
This “makes building high-rise rentals more cost-effective than high-rise condos,” Mr. Moffatt said by e-mail. “We’ve also seen some cities, like Toronto, start to offer lower development charges on purpose-built rental vs. condos, which also changes the relative economics of projects.”
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Many of Canada’s major cities have seen rents and home prices drop as of late, offering relief from years of hefty increases.
Robert Kavcic, senior economist at Bank of Montreal, said in a client note that this period of fading rents could persist for a while.
“There is a very full pipeline of supply coming right as population growth is stepping back,” he said.
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