MNI BRIEF:Toronto Home Starts Slowest In 30Y As Investors Bail

Housing starts in Canada's most populous city of Toronto are on track for the slowest year in three decades after the rise of interest rates from record lows led investors to avoid new projects, a trend the federal housing agency said Tuesday will prolong an affordability squeeze.

The city's housing starts fell 44% over the first half of the year, the worst per capita pace since 1996, led by a 60% drop in condominium apartments, Canada Mortgage and Housing Corp said. Only a marginal recovery is expected in 2026 and 2027, keeping construction activity well below historical levels, the report said.

Prime Minister Mark Carney has pledged to restore affordability by doubling homebuilding over the next decade, but the federal agency deputy chief economist Tania Bourassa-Ochoa said "systemic changes to Canada's housing system are necessary to create an environment with more cost and time certainty to increase supply." (See: MNI INTERVIEW: Canada Condo Dip Seen On Migrant Turn-Adviser) CMHC estimates starts must rise by about 30% in Vancouver and 70% in Toronto over the next decade to restore pre-pandemic affordability.