In a time when housing supply is more necessary than ever, a new report found that housing starts across Canada’s largest cities increased by only 1 per cent in the first half of 2023. This number comes despite a record high of housing starts in Toronto and an even larger increase in housing starts in Vancouver.

There were 25,768 housing starts in Toronto during the first half of 2023 according to the Canadian Mortgage and Housing Corporation (CMHC) report, an increase of 32 per cent compared to the same period in 2022. In Vancouver, there were 17,458 new starts, an increase of almost 50 per cent.

But Canada’s four other largest markets reported a decline in housing starts compared to 2022, many of which were in the double digits (and as high as a 58 per cent decline in Montreal). This levelled out the Canada-wide numbers, resulting in a measly 1 per cent increase compared to the first six months of 2022.

Apartment housing starts carried the bulk of the gains, accounting for nearly three quarters of all housing starts in the first half of 2023. In Toronto, there were 21,200 apartment housing starts, an increase of 58 per cent from last year — while detached, semi-detached and row houses reported much more dismal numbers. Both detached and row housing starts decreased by over 21 per cent compared to 2022, while semi-detached housing starts decreased by a whopping 66 per cent.

A driving factor behind the high number of apartment starts in Toronto is skyrocketing purpose-built rental starts. The city reported 6,387 starts in the first half of 2023, 4.5 times the number of starts the year before and the largest number of rental apartment units initiated in the Toronto area over the last several decades.

However, the CMHC notes that many of these housing starts are projects that were already financed in the more forgiving economic environment of 2022, leading to a surge in housing starts in the first half of 2023.

“We expect the pace recorded by Toronto in the first half of 2023 to slow by the end of the year, reflecting higher material, labour and financing costs,” the report states.

And as construction costs continue to increase and interest rates remain high, this will contribute to longer construction time — something we’re already seeing in Toronto. The average months of construction in the first half of 2023 increased by three months in the city compared to the same period in 2022, the highest change across the country.

Overall, the CMHC report confirms the country will need drastically higher construction levels to address the affordability crisis. “Despite increases in some centres, the overall level of new construction activity remains too low to address the country’s affordability and housing supply crisis over the longer term,” the report states. “Significant increases in the construction industry’s productivity will be critical to ensuring supply can be increased to address this crisis over the longer term.”