Building Intentions Begin to Slow as
Elevated Borrowing Costs Take Hold
Permitting activity losing momentum. When the Bank of Canada started its interest rate hiking cycle, residential permitting activity began to decline, down 17 per cent between May 2022 and February 2023. As a result, housing starts in Canada dropped nearly 8.0 per cent year-to-date as of November 2023 when compared to the same time period in the prior year. However, once Canada’s Central Bank paused its interest rate hiking cycle in March of last year and uncertainty began to show early signs of abating, residential development activity gained some momentum. The value of building permits issued was up 5.3 per cent as of November, and housing starts began to trend up. This was mainly fueled by strong gains in the multifamily sector as permitting increased by just under 10 per cent over the course of 2023. Stabilizing interest rates, healthy rent growth, historic population gains, and low-cost financing provided by the CMHC all helped support this uptick in construction activity.