CIBC warns housing starts may mask weakness in Canada’s construction activity
Latest news on WhatsApp أجدد الأخبار على واتسابCIBC says emerging cracks in Canada’s housing market could weigh on the broader economy as construction activity softens and households tighten spending.
Deputy chief economist Benjamin Tal said the market is effectively “broken” from an economic standpoint: homes remain too expensive to buy, yet not expensive enough to build profitably under current cost conditions.
The bank argues headline housing-start figures can overstate current momentum because of how starts are recorded and the lag that can follow, especially for large multi-family projects. CMHC counts a start when concrete has been poured over the entire footing, and Tal said today’s starts can reflect activity from as far back as October 2024 rather than what is happening now.
CIBC estimates construction underway could be as much as 50% lower than current figures imply in the Greater Toronto Area, and about 30% lower in the Vancouver region.
The report also points to “wealth effects” and credit constraints: falling or stagnant prices can reduce perceived household wealth and make it harder to borrow against home equity, which can curb consumer spending. While lower prices may help some first-time buyers, Tal warned that falling values are not a long-term affordability solution and called for faster action to bring down building costs, including reducing high development charges.
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Tahani Elghazaly5252 Posts
