Supply and demand will dictate the trend in house prices throughout Canada. This week we are looking at the mid to longer term projection on Canada's housing market prices by analyzing the new supply being built. With over 242,000 immigrants arriving in the first quarter of 2024, pushing Canada’s population past 41 million, the demand for housing is more critical than ever.
Looking at the new housing starts in Canada since 1948 you can get an idea of the new supply that was created in those years. As we are at the same range of new supply as back in the early 1970’s housing supply boom, the difference between then and now is roughly 20 Million people. In the last 50 years Canada has close to doubled its population from what it was in 1972 at 22 Million people.
In a recent release by CMHC on housing starts. Last month, there was a 9% decline in new house construction compared to the previous month. While overall home construction slowed down, certain cities are experiencing a increase, and others are lagging. Supply in my opinion is the only solution for housing affordability.
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Single-Detached Houses: Construction increased by 1%.
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Multi-Family Buildings: Construction decreased by 11%.
Overall New Houses in British Columbia: The number of new houses fell by 12% from the previous month. Single-Detached Houses in Cities: In cities with over 10,000 people, construction increased by 11%. Multi-Family Buildings in Cities: In these same cities, construction decreased by 15%, but not all regions saw the same decrease.
With overall, fewer houses are being built across Canada and in BC compared to last month. There are some cities like Kelowna that are trending upwards, and are seeing additional supply compared to June last year, since then:
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Victoria: Built 5% more houses.
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Kelowna: Built 54% more houses.
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Abbotsford: Built 27% more houses.
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Vancouver: Built 18% fewer houses.
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Nanaimo: Built 20% fewer houses.
When looking at the supply aspect of the housing this is positive trend in Kelowna for housing starts compared to 2023, however the tap can also be shut off at any time, we will see how the trends continues throughout the year. New housing supply did drop in 2023 compared to 2021 (2,517) and 2022 (2,752).
On June 27th the provincial government has set the standard for Kelowna to build 8,774 over the next 5 years which these targets are said to be the equivalent of 75 percent of the actual housing need. Kelowna as part of the implementation of the small scale multi unit housing has already rezoned 1000’s of properties allow multifamily townhomes ahead of the June 30th, 2024 deadline (reach out if you have questions on these changes and if your home was impacted), there is a lot more opportunity for building these days, only question is do the numbers make sense for everyone involved.
A working concept I have, and I would love to know your thoughts on this so please respond to the email and provide me your insight. Even though most the immigrants are not going to be in a position to purchase a home, they will occupy rental supply, which will increase the overall demand and eventually increase prices for rentals. This wave will push people on the fringe of buying into the market due to the increase in rent making it more comparable to a mortgage. Demand will greatly increase for entry level product and work its way through to the mid level products.
Mark Coons and Maddie Coons
Selling Kelowna Real Estate Group
(778)744-0872
