Canada quietly passed a new milestone in March, and industry experts haven’t decided what to make of it. According to the latest numbers from the Canada Mortgage and Housing Corporation (CMHC), March saw a high for new home construction. This new construction high is in response to the population boom the country saw last year, but can population keep up with the rapid pace of building?
Housing Starts Highest Since 2007
Construction of new housing rose to a multi year high in March. The CMHC counted 235,674 starts in March, a 28% increase from the same time last year. This is 52% above the 27 year average for the month, so it’s a lot of building.
It’s been almost a decade since Canada has seen numbers this high. September 2007 was the most recent month to see numbers in this quantity, when it saw 252,846 units started. Before that we need to go back to January 1990 to see a higher number, when 237,453 starts were documented.
Canada Estimated Population Change
Source: Statistics Canada.
Population Growth Was The Highest Since 1989
All of this housing must mean a booming population, right? Kind of. 2016 saw the population estimate jump by 485,034 to 36.28 million people. That’s a 29% increase over the average annual population growth. The last time we added this many people was in 1989, when the population jumped 485,034 people. It’s worth noting that both population booms were followed with record construction.
Residential Construction Starts In Canada
What You Should Look Out For
A construction boom following a population boom makes absolute sense on paper. However, developers often develop based on the assumption that the population will continue to grow at a breakneck speed. This is often not the case, and over construction in 1990 resulted in declining prices shortly after, especially in urban centers like Toronto that saw rapidly increasing prices during the boom.
This could be a “new normal,” but sustaining population growth at this level is really tough. Since Canada is largely dependent on immigration for growth, the country would need to import roughly the population of Halifax this year. While that sounds cute and friendly on paper, it brings a different set of problems with it.
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