Rate pressure holds Manitoba housing starts down

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This article was published 16/10/2024 (389 days ago), so information in it may no longer be current.

Despite government emphasis on creating more homes, Manitoba has seen fewer housing starts this year compared to last.

However, the trend may be shifting: Manitoba saw a jump in construction in September, new data from the Canada Mortgage and Housing Corp. show.

In the January-September time frame, housing starts — marked at the beginning of construction — dipped to 4,405 in Manitoba. The keystone province clocked 4,801 during the same time period in 2023.

Winnipeg’s housing starts declined 15 per cent year-over-year, to 3,685 from 4,316.

“We had a period of time where interest rates rose fairly rapidly,” Taylor Pardy, a lead CMHC economist, noted Wednesday.

As a result, potential homeowners waited on the sidelines, as did some developers. The Bank of Canada had spent much of the past two years raising its key policy rate, reaching five per cent.

Its past three announcements, however, have been rate cuts. Another announcement is scheduled Oct. 23; it could bring a half-percentage point decrease, University of Manitoba economics associate professor Fletcher Baragar predicted.

“Buyers seem to be getting back into the market,” Pardy said.

Winnipeg had a minor decrease in year-over-year detached home builds — down two per cent, to 1,071 builds — between January and September. Across the province, such houses were increasingly being built, up four per cent year-over- year.

The overall housing start decline comes from multi-family dwellings such as apartments, condominiums and townhouses, noted Lanny McInnes, president of the Manitoba Home Builders’ Association.

He called such construction “cyclical.”

Many projects began last year and continued into 2024. A number of new developments have been approved but not started, McInnes added.

“You will start seeing those types of buildings happening,” he said.

Baragar forecasts a rebound in construction as interest rates decline. Federal programs are available to encourage new housing, but “they’re going to take some time to have an impact on the market,” he said.

Winnipeg Mayor Scott Gillingham set a goal to approve 8,000 housing units by year end. The city surpassed the goal earlier this month, announcing its approval of 8,843 units in less than a year.

“The next phase … is turning approvals into building permits and, ultimately, construction sites,” McInnes said.

Permitting takes time, he added. The MHBA is working with the city to “streamline” homebuilding.

Already, Manitoba is experiencing an uptick in home starts. The province saw a 22 per cent increase when comparing this September to last — to 451, from 369.

McInnes points to the interest rate decrease and the “stability” it’s given new homeowners and developers.

Manitoba counted 1,299 single, detached home starts between January and September 2024. It saw 3,106 other home starts during the same time period (down 13 per cent from the prior year).

Nationally, Canada experienced a two per cent increase in home starts between January and September in its metropolitan areas.

gabrielle.piche@winnipegfreepress.com