The rate of construction is not expected to exceed 100,000 homes annually for the foreseeable future
In its latest economic statement, the Ontario government said that its projections for housing starts in the province have risen from its prior expectation earlier this year, although it’s still far behind the pace required to build 1.5 million homes.
The government has previously pledged to build this number of homes by 2031.
“Despite a challenging interest rate environment, the outlook for housing construction has improved in every year of the outlook since the 2023 Budget,” the government said in its just-released 2023 Fall Economic Statement.
However, the government admitted that the rate of construction is not likely to exceed 100,000 homes annually for the foreseeable future.
Ontario is expecting housing starts to tally up to 89,500 in 2023 and 84,500 in 2024, higher than the 2023 Budget projections of 80,300 in 2023 and 79,300 in 2024. Starts are then anticipated to surge to 89,200 in 2025 and 94,400 in 2026.
Ontario Premier Doug Ford expressed concern about the impact of recent rate increases on Ontario's families and businesses, citing ten interest rate hikes in the past 18 months.
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 5, 2023
Full article: https://t.co/XzWpiHa5vC#mortgageindustry #ratehike #interestrates
Market slowdown won’t be sufficient in ensuring more supply
Even a recent slowdown in sales activity brought about by multi-decade-high interest rates will not be enough to make a difference in supply. Home sales in September were 16.2% below the most recent peak seen in May, according to the statement.
“The average home resale price edged up briefly, followed by a further moderation,” the government said. “In September, Ontario home resale prices were 2.9% below the recent peak in June.”
Strong demographic demand and what the government described as a “more supportive” interest rate environment will likely spur renewed activity moving forward.
The Ontario government is expecting home resales to contract by 11.7% in 2023 before a resurgence of 11.5% in 2024 and 22.5% in 2025.
Average home resale prices are anticipated to fall by 4.6% this year, and then grow by 1.3% in 2024 and 3.6% in 2025.
