Canada's building more apartments than it has in years. Can the trend continue?
High costs could slow construction, as demand continues to surge.
It might be hard to believe but last year, more new rental apartments were built in Canada than any year in the previous three decades, data from the Canada Mortgage and Housing Corporation (CMHC) shows.
This new-found supply didn't come close to keeping up with demand, as cities across the country saw rental prices skyrocket and vacancy rates plunge.
The level of construction also varied region-by-region. Some cities like Calgary saw a big boost in new apartments last year, while others like Saskatoon saw a plateau, or in Toronto's case, even a decline.
But while every market is different, in recent years the high-level trend in Canada has been steady growth in the construction of new rentals.
Still, it's unclear whether it can continue at the same pace. The number of Canadians who rent is growing faster than the number who own their homes, as high prices and rising interest rates push more people to rent rather than buy. People moving to Canada — and within Canada — have also added pressure to different markets, and as immigration ramps up as a way to fill critical labour shortages, the demand for rentals is expected to continue to grow.
Rent increased more than 18% last year for new tenants, new numbers show
While surging demand for rentals could spark a further boom in this type of development, some warn that building apartments is a tricky financial proposition at the best of times, and that high interest rates and inflation could slow down momentum just as the need accelerates.
End of an era?
The recent rise in rental construction has been driven, at least in part, by the economic conditions of the last few years. Interest rates were low, while rents have generally been on the rise...