The slowdown in the real estate sector continues to be felt almost everywhere in Quebec. After the slumps observed on the resale market, housing starts are also experiencing significant setbacks.
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Housing starts fell 8% in July from the same period last year, according to the latest data from Canada Mortgage and Housing Corporation (CMHC) released yesterday.
All forms of housing are affected. But none as sharp as individual dwellings, a 12% drop in one year. This is the seventh drop in construction sites in the province since the beginning of the year.
“That does not surprise me. Ever since the Bank of Canada started raising rates, it’s been total death,” laments Ray Junior Courtemanche, President of Investissement Ray Junior, in Mirabel.
The latter is at the forefront of several dozen companies, most of which are linked to real estate projects, whether residential, commercial or institutional. Cité Mirabel, SkyBlü Condos and 7SENS are just some of his recent achievements in the northern suburbs of Montreal.
But for the past few months, he says, everything has been going in slow motion. “Consumers are more fearful, but so are banks. I do business with Desjardins and the country’s seven chartered banks; and I can confirm that none of them are currently lending.
“If banks are cautious, he continues, how do you expect promoters to be able to fund their projects? In such a context, it is normal for the data to show a decline in housing starts. »
Economist Paul Cardinal of the Association of Construction and Housing Professionals of Quebec confirms the devastating impact of back-to-back rate hikes on the industry.
“Increasing construction costs, supply problems and labor shortages had already managed to slow down housing construction. Now, he says, rising mortgage rates are acting as a burden.”
Sharp decline in Quebec
This decline was mainly felt in four of the six metropolitan areas (CMAs), most notably Quebec, which fell by 56% compared to July 2021. For their part, the Trois-Rivières and Montréal CMAs posted declines of 25% and 19%, and
Conversely, two regions bucked the trend; that of Gatineau with a jump of 134% in July and that of Saguenay with an increase of 33%.
For comparison, across the country, July housing starts were up 3% from July 2021.