October housing starts a ‘minor miracle’ but not enough: expert
A housing policy expert says the latest figures on Canada’s housing starts are encouraging given higher borrowing costs, though he cautions that the pace of building needs to increase drastically.
On Thursday, the Canada Mortgage and Housing Corp. (CMHC) said the seasonally adjusted annual rate of housing starts hit 274,681 in October, rising from 270,669 a month earlier.
Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute, told BNN Bloomberg that the latest housing start figures are a “minor miracle” given higher interest rates.
“Over, I think today’s data is a good news story, but we need to keep in mind that the CMHC tells us we need to build over five million homes in nine years to restore affordability,” he said in a Thursday interview. Based on CMHC’s data, he said the pace of building is not on track to reach that five million target.
“So moving in the right direction, that’s a good thing. But we’re not going nearly far enough.”
Moffatt said recent government tax incentives are starting to have an impact on larger markets, noting that building activity for new rental projects in Toronto and Vancouver is starting to rise.
“Where we’re seeing the most activity is on the high-rise component. Single detached home starts are down and down significantly,” Moffatt said. “I think these (policies) are starting to have an effect. It will take time.”
“Obviously, planning a high-rise building takes a fair bit of time, but I think we’re already seeing the HST move, and some of these other moves start to kick in and create some purpose-built rental starts.”
According to Moffatt, the majority of the purpose-built units in the pipeline are one-bedroom units or studio apartments. However, he said the largest areas of need is family-sized units.
The prospect of converting underused office space into residential units has become a hot topic amid Canada’s housing crunch.
Moffatt said conversions could happen “on the margin,” but he does not think those alone will solve the housing supply issue due to difficulties with office floor plates that often do not meet the requirements for residential housing.
“In the office space area, we’re starting to see built forms that are more easily convertible than what we’ve done in the past. So a building owner could convert it from office to residential or vice versa,” he said.
“I think we are starting to see those floor plans, but those big office towers in the 50s, 60s and 70s, they are very, very difficult to convert.”
Overall, Moffatt said Canada needs to take a more innovative approach to home building and he is hoping to see advancement to help build homes faster and more sustainably.
“Canada has an innovation strategy for everything from lentils to aerospace, but we don’t have one for housing construction, despite what an important sector it is,” Moffatt said.
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