New-home construction in Manitoba slowed in April
Manitoba saw 343 shovels hit the dirt last month, down 37 per cent from the 543 that broke ground in April 2022: CMHC
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New-home construction in Manitoba slowed significantly overall in April, compared to March and the same time last year.
The province saw 343 shovels hit the dirt last month, down 37 per cent from the 543 that broke ground in April 2022, according to a recent report by the Canadian Mortgage and Housing Corporation.
The seasonally adjusted annual rate (SAAR) reveals a more frightening number for Manitoba, showing a 47 per cent drop from March.
It’s nothing that was unexpected, though, according to industry experts.
“Generally, across most markets, housing starts are expected to be down this year,” said Adebola Omosola, a specialist in housing economics with the CMHC who covers Winnipeg.
“It’s no different for Winnipeg in the sense that developers are facing higher financial costs from sustained levels of high-interest rates. Interest rates this year is higher than what it was last year. So financing conditions are a bit tougher, material costs are high, so it’s having a negative effect on the development of new units.”
Most of the fall-off is due to a halt in multifamily builds, which typically account for 60 per cent of new projects. Developers are still ailing through tough times with housing supply that was brought on by the pandemic, which shot up interest rates, the cost of materials and created a labour shortage.
Though, if the whole country is experiencing the same issues, it can be a bit perplexing why Manitoba has seen one of the worst falls since last year. The 37 per cent decline from April 2022 is the fourth-sharpest drop-off among the 12 provinces examined. Saskatchewan shows a national worst 58 per cent decrease while New Brunswick revealed a top-ranked 158 per cent increase during that time.
“I might not have a direct reason for you,” Omosola conceded. “Everyone is facing the same tough conditions in terms of having to deal with labour shortages, the path of inflation and interest rates.
“How it’s reflected month-by-month may change. The data for next month might come out and you could see a totally different trend compared to what we have. I do understand that some of these markets are bigger markets. They are much bigger in human population and what drives demand within those markets might be different because they are bigger CMAs. So that might be a factor.”
On a grand scale, the numbers are a bit more promising, as monthly SAAR starts in urban areas increased 26 per cent across Canada. Multi-unit urban starts increased 33 per cent while single-detached urban starts decreased two per cent nationally.
Indeed, the market is in flux. Lanny McInnes, president and CEO of Manitoba Home Builders Association, said the numbers locally may appear worse than they actually are, however, coming off a year that experienced an abnormally high amount of starts.
“The best way to look at this report — and put it into proper context — is to see how this lines up with CMHC’s report from this time last year,” said McInnes.
“Where you’re seeing the percentage drop is really around all other forms of multi-family homes, and we’re seeing those levels come down from very high levels in 2022. When you compare the 2023 numbers — 1,443 starts — we’re still up compared to the 2021 year-to-date level of 1,180.”
While still conscious of the housing gap that exists in the province and across the country, McInnes assured he’s not worried about the number of starts in Manitoba at this time.
“No, not at this point. The level of activity that we’re seeing is more consistent certainly on the multifamily side of things with what we saw in 2021 and even higher,” he said. “On the single-family detached side, we’re seeing levels that are at par or slightly ahead of where we were last year.
“The report is consistent with what we’ve been hearing and what we expected to see, and the bulk of that percentage decrease, in terms of starts, is really focused on multifamily and larger multifamily.”
One reality that bears remembering is that a strong demand for housing will persist. Last fall, the federal government announced its plans to welcome 500,000 immigrants to Canada by 2025. The CBC reported that should work out to Manitoba taking in about 20,000 newcomers per year.
The typical cycle of an immigrant, McInnes noted, is to occupy a rental property for two to three years while establishing themselves in Manitoba before moving to a newly constructed home.
As long as the shortage in housing supply persists, the housing shortage across the country will remain, and likely widen.
Joshua Frey-Sam happily welcomes a spirited sports debate any day of the week.