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Business Times
8 hours ago
- Business
- Business Times
Doubling home construction will barely improve affordability in Canada: report
[ottawa] Doubling the pace of homebuilding in Canada will only bring affordability back to levels seen right before the Covid-19 pandemic, according to a new government report that lowers expectations for the impact of construction on housing costs. The country must boost building to as much as 480,000 housing units a year by 2035 just to bring affordability back to where it was in 2019, the report from the Canada Mortgage & Housing Corp (CMHC) said on Thursday (Jun 19). The current rate of homebuilding is about 250,000 units, the agency said. Earlier estimates from the national housing agency called for a similar boost in home construction and targeted 2030 as the year it could be achieved. That previous forecast suggested that a rapid boost in housing supply would bring affordability back to 2004 levels. 'Restoring affordability to levels last seen two decades ago isn't realistic, especially after the post-pandemic price surge,' CMHC said. The change in forecast 'highlights how widespread the housing affordability challenge has become across Canada'. While a lack of affordable housing has long plagued major Canadian cities such as Toronto and Vancouver, the low interest rates of 2020 and 2021, along with rapid population growth after the pandemic eased, drove a homebuying frenzy. Prices surged in many cities and regions. Prime Minister Mark Carney was elected in April in part on promises to boost homebuilding to address what many see as a housing crisis. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Economists surveyed by Bloomberg expect Canada's housing starts to average 230,000 units between 2025 and 2027, a significant deceleration in construction because interest rates and economic uncertainty have weighed on the industry. Canada's housing agency explained it revised its timeline partly because of how long it takes to get new housing built. The new estimates now take into account rezoning processes that often add years to construction times, the agency said. These projections are not official government targets, the report said, but estimates of the scale of the problem. Carney's election platform nevertheless promised to ramp up homebuilding activity over the next decade to eventually reach 500,000 homes a year. Last year, all the costs of a home with a typical mortgage would have eaten up about 54 per cent of the average Canadian household's income, the CMHC report shows. The current rate of home construction would result in almost no improvement in that ratio over the next 10 years. By doubling the rate of home construction, that ratio would drop to 41 per cent by 2035, according to the CMHC report. Of all Canada's major cities, Montreal, its second-largest, faces the biggest housing supply gap, with affordability set to deteriorate if this is not addressed, the report said. Toronto, the largest city, must boost annual homebuilding by 70 per cent to improve affordability. 'For many years, housing prices and rents in Vancouver and Toronto attracted attention from all over the world,' the report said. 'Over time, these increases came to burden many Canadians and their children. Low-income and some middle-class households struggle to even find a place to live, let alone at a price they can afford.' BLOOMBERG
Business Times
12 hours ago
- Business
- Business Times
Canada slashes forecast for making housing more affordable
[ottawa] Doubling the pace of homebuilding in Canada will only bring affordability back to levels seen right before the Covid-19 pandemic, according to a new government report that lowers expectations for the impact of construction on housing costs. The country must boost building to as much as 480,000 housing units a year by 2035 just to bring affordability back to where it was in 2019, the report from the Canada Mortgage & Housing Corp (CMHC) said on Thursday (Jun 19). The current rate of homebuilding is about 250,000 units, the agency said. Earlier estimates from the national housing agency called for a similar boost in home construction and targeted 2030 as the year it could be achieved. That previous forecast suggested that a rapid boost in housing supply would bring affordability back to 2004 levels. 'Restoring affordability to levels last seen two decades ago isn't realistic, especially after the post-pandemic price surge,' CMHC said. The change in forecast 'highlights how widespread the housing affordability challenge has become across Canada.' While a lack of affordable housing has long plagued major Canadian cities like Toronto and Vancouver, the low interest rates of 2020 and 2021, along with rapid population growth after the pandemic eased, drove a home-buying frenzy. Prices surged in many cities and regions. Prime Minister Mark Carney was elected in April in part on promises to boost home building to address what many see as a housing crisis. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Economists surveyed by Bloomberg expect Canada's housing starts to average 230,000 units between 2025 and 2027, a significant deceleration in construction because interest rates and economic uncertainty have weighed on the industry. Canada's housing agency explained its revised timeline in part because of how long it takes to get new housing built. The new estimates now take into account rezoning processes that often add years to construction times, the agency said. These projections aren't official government targets, the report said, but estimates of the scale of the problem. Carney's election platform nevertheless promised to ramp up home building activity over the next decade to eventually reach 500,000 homes per year. Last year, all the costs of home with a typical mortgage would have eaten up about 54 per cent of the average Canadian household's income, the CMHC report shows. The current rate of home construction would result in almost no improvement in that ratio over the next 10 years. By doubling the rate of home construction, that ratio would drop to 41 per cent by 2035, according to the CMHC report. Of all Canada's major cities, Montreal, its second largest, faces the biggest housing supply gap, with affordability set to deteriorate if this is not addressed, the report said. Toronto, the largest city, must boost annual homebuilding by 70 per cent to improve affordability. 'For many years, housing prices and rents in Vancouver and Toronto attracted attention from all over the world,' the report said. 'Over time, these increases came to burden many Canadians and their children. Low-income and some middle-class households struggle to even find a place to live, let alone at a price they can afford.' BLOOMBERG
Business Times
3 days ago
- Business
- Business Times
Britain's housing splurge is long overdue
[LONDON] The £39 billion (S$67.7 billion) boost that Britain's Labour government has announced for affordable housing still leaves its ambition of building 1.5 million homes over five years looking like a stretch. That shouldn't obscure the broader point that the country has underspent for decades on accommodation for its most disadvantaged. Any attempt to reverse this trend has the potential to pay for itself in wider economic benefits and even lead to a healthier private property market. The state's retreat from providing housing began with Margaret Thatcher in the 1980s and gained added impetus after 2010 with the Conservative-led government's efforts to cut expenditure and repair the public finances following the global financial crisis. Rather than building homes, the government aimed to steer financial support to low-income households to enable them to rent in the private market or from not-for-profit housing associations. The guiding philosophy was that a more market-based approach would encourage a more aspirational society; public housing, by contrast, kept people caught in dependency. The observed outcomes haven't been kind to this theory. The market has failed to generate adequate supply, leading to a shortfall of homes estimated at more than 4 million by the London-based Centre for Cities think tank. Meanwhile, the presence of more former social-housing tenants competing for private accommodation has helped to drive up rents, underpinning a boom in property values that has made home ownership unaffordable for many. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up The government shelled out £35 billion in housing benefit last financial year – triple in real terms what it was paying at the start of the 1990s. And yet the number of homeless has soared, put at 354,000 people as of December by the charity Shelter. The self-defeating absurdity of the system is that the state has abdicated responsibility at one end while retaining it at the other. Having pushed people into the private market, the central government can (as it did in the 2010s) squeeze their benefit payments to save money – but if, as a consequence, a family can no longer pay the rent and are evicted by their private landlord, it becomes the responsibility of the local authority to rehouse them. The cost rebounds on the state. In the worst cases, for lack of alternatives, people can be placed in expensive and unsuitable short-term bed-and-breakfast hotels and hostels. Spending on these rose more than fivefold to £732 million between 2018 and 2024, according to a February report by researchers at the London School of Economics. It's a false economy that costs British taxpayers more than it would simply to fund appropriate levels of public housing in the first place. The government could save £1.5 billion a year by investing £5 billion annually to build more affordable homes, a 2023 study by University College London researchers found. The report estimated the costs of homelessness, including housing people in temporary accommodation, at £6.5 billion a year. This goes beyond financial calculations. The human and economic costs of housing policies must be considered. Safe and permanent shelter is fundamental to physical and mental well-being. A child living in a bed-and-breakfast hotel can't be expected to learn well at school. An adult won't be able give his or her best at work. Britain has issues with stagnant productivity, high rates of long-term sickness and economic inactivity, and poor educational outcomes for socially deprived children. How many of these comorbidities can be traced back to insufficient and substandard housing? Addressing the problem might just, rather than fostering a culture of welfare reliance, make the UK a more productive (as well as happier) country. Paradoxically, the advent of a large-scale, state-funded social-housing construction programme could also improve the functioning of the private market. For one thing, it will relieve pressure on rents. It could also be used to spur innovation and support small and medium-sized developers that have been increasingly squeezed out over the past four decades. The UK housing market is dominated by an oligopolistic group of large developers and is resistant to change; new-build quality is often perceived as poor. Counter-cyclical state spending can balance out the boom-and-bust property cycles that smaller builders are least able to withstand. Design of Labour's programme will be important. The government describes its 10-year funding plan as the biggest cash injection into 'social and affordable housing' in 50 years. Though there's some blurring between the categories, there's a difference. Affordable rental housing is charged at up to 80 per cent of the private market rate in the area. Social rents are generally around 50 per cent to 60 per cent of the average local rate, though this can be as low as 30 per cent in London. Only social housing is genuinely affordable because rents are set by a formula tied to local incomes, according to Shelter. This is where the need is most acute, yet social rented housing has shrunk as a share of the total. A parliamentary committee concluded last year that England needs at least 90,000 net additional social rent homes a year, while the UCL study projected building 72,000. Even if the entirety of Labour's programme was devoted to social housing, it wouldn't come close to those figures. In broad outline, though, the plan addresses an obvious market failure and is long overdue. As far as financial stability permits, the government should do more. BLOOMBERG Matthew Brooker is a Bloomberg Opinion columnist covering business and infrastructure.
Business Times
4 days ago
- Business
- Business Times
New private home sales in May lowest for 2025, but up 40% year on year
[SINGAPORE] With no new projects launched in May, developers in Singapore sold 312 private homes in the month, less than half the 663 units transacted in April. Still, the latest sales figure – which excludes executive condominiums (ECs) – was 39.9 per cent higher than the 223 units moved in May 2024, data released by the Urban Redevelopment Authority (URA) on Monday (Jun 16) showed. May's new home sales were the lowest monthly level recorded in the year thus far, amid the absence of new project launches and slower sales as the nation was preoccupied with the general election, said OrangeTee & Tie chief executive Justin Quek. In fact, it was the first month in 2025 that had no fresh projects put on the market, said Wong Siew Ying, PropNex head of research and content. 'The decline in new home sales in May is not unexpected, as fresh project launches tend to drive transactions each month,' she explained. Nicholas Mak, chief research officer at added that ongoing uncertainties in the economy and job market dampened private housing sales on both the demand and supply sides. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up 'Developers are waiting for a more favourable market condition to launch their residential projects, while homebuyers are waiting for choice project launches and lower prices,' he said. Including ECs, 336 units were sold in May with just 20 units launched, compared with 263 units sold and 238 units launched in the same month in 2024. In April this year, 759 units were sold and 1,344 units were launched. Nonetheless, the sales tally for the first five months of 2025 is around 4,350 units – more than double the 1,688 sold in the same period last year, said Mohan Sandrasegeran, SRI head of research and data analytics. 'The stronger performance (this year) underscores resilient buyer confidence and more compelling project offerings, even amid broader economic uncertainties and cautious sentiment,' he added. Quek noted interest picking up in the luxury market, with nine new non-landed homes sold for between S$5 million and S$10 million in May – up from the two units that transacted for the same price range in April. There were also three transactions worth more than S$10 million recorded in May, similar to the previous month, he said. The priciest deal was for a 4,489-square-foot (sq ft) unit at the freehold 21 Anderson condominium in District 10 – for which marketing began in April – at S$24 million or S$5,347 per square foot (psf). The other two units – spanning 4,209 sq ft and 4,219 sq ft – were in 32 Gilstead in District 11. Both changed hands for S$15.1 million or around S$3,600 psf. All three were bought by permanent residents, noted Lee Sze Teck, Huttons senior director of data analytics. Overall, the proportion of such buyers remained relatively low, accounting for 14.4 per cent of transactions valued at more than S$1.5 million. Singaporeans were behind 83.4 per cent of these purchases, and foreigners a mere 2.2 per cent. Slow sales to persist In June, market watchers expect primary sales to remain sluggish, with no major launches lined up amid the school holiday lull. The only launch is that of freehold Arina East Residences, which released a limited number of units for sale to invited clients in the first week of June. So far, just nine of its 107 units have been sold at a median price of S$2,982 psf, URA data showed. The uncertain macroeconomic landscape, stemming from global trade challenges posed by US tariff policies, may also prompt prospective buyers to be more cautious, added Quek of OrangeTee. 'On the other hand, interest rates have been moderating for the past few months, potentially drawing some investors back into the property market as mortgages become more affordable,' he said. 'Moderating interest rates may also help (public housing) upgraders better afford a private condo, assuming employment and real wages hold stable.' Huttons' Lee estimates that around 16 projects generating more than 7,800 homes may be launched for sale in the second half of this year. These include the 683-unit W Residences Marina View in District 1, the 343-unit LyndenWoods in District 5, and the 600-unit Otto Place EC in District 24. But Tricia Song, CBRE research head for Singapore and South-east Asia, believes that with most of these projects located in the Core Central and Rest of Central regions – which tend to see higher prices – the monthly sales tally is unlikely to surpass 1,000 units, as seen in previous quarters. The full-year figure may therefore come in at 7,000 to 8,000 units, signalling a slowdown in demand, she added. 'There is downside risk to this projection should economic conditions worsen significantly.' Prices may consequently rise 3 to 4 per cent for the year, thanks to a still-low unsold inventory and strong household balance sheets, she said. 'Growth momentum could plateau in the next few quarters on a weaker economic outlook.'
Business Times
4 days ago
- Business
- Business Times
New private home sales lowest for the year in May, but up 40% year on year
[SINGAPORE] With no new projects launched in May, developers in Singapore sold 312 private homes in the month, less than half the 663 units sold in April. Still, the latest May sales figure – which excludes executive condominiums (ECs) – was 39.9 per cent higher than the 223 units moved in the same month a year earlier, data released by the Urban Redevelopment Authority (URA) showed on Monday (Jun 16). May's new home sales were the lowest level recorded in the year thus far, in the absence of new project launches and slower sales with the nation preoccupied with a general election during the month, said OrangeTee & Tie chief executive Justin Quek. In fact, this was the first month in 2025 where there have been no fresh projects put on the market, said Wong Siew Ying, PropNex head of research and content. 'The decline in new home sales in May is not unexpected, as fresh project launches tend to drive transactions each month,' Wong explained. Nicholas Mak, chief research officer at added that ongoing uncertainties in the economy and job market dampened private housing sales on both the demand and supply sides. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up 'Developers are waiting for a more favourable market condition to launch their residential projects, while homebuyers are waiting for choice project launches and lower prices,' he said. Including ECs, 336 units were sold in May with just 20 units launched, versus the 263 units sold and 238 units launched in the same month in 2024. In comparison, 759 units were sold and 1,344 units launched in April. Still, the new sales tally for the first five months of 2025 stands at around 4,350 units – more than double the 1,688 sold in the same period last year, said Mohan Sandrasegeran, Singapore Realtors Inc head of research and data analytics. 'The stronger performance (this year) underscores resilient buyer confidence and more compelling project offerings, even amidst broader economic uncertainties and cautious sentiment,' he said. Quek saw persistent interest picking up in the luxury market, with nine new non-landed homes sold for between S$5 million and S$10 million in May – up from the two units that transacted for the same price range in the month before. There were also three transactions of more than S$10 million recorded in May, similar to the previous month, he said. The priciest deal was for a 4,489 square feet unit at the freehold 21 Anderson condominium in District 10, which started marketing in April, for S$24 million or S$5,347 per square foot (psf). The other two units – spanning 4,209 sq ft and 4,219 sq ft, respectively – were sold at 32 Gilstead in District 11. Both changed hands at S$15.1 million or around S$3,600 psf. All three were bought by permanent residents, pointed out Lee Sze Teck, Huttons senior director of data analytics. Overall, this group of buyers remained relatively low, accounting for 14.4 per cent of transactions valued at over S$1.5 million. Singaporeans were behind 83.4 per cent of such purchases, and foreigners a mere 2.2 per cent. Slow sales to persist In the following month, market watchers expect primary sales to remain sluggish with no major launches lined up amid the school holiday lull. The only launch on the market is the freehold Arina East Residences, which released a limited number of units for sale to invited clients in the first week of June. So far, just nine of its 107 units have been sold at a median price of S$2,982 psf. The uncertain macroeconomic landscape, stemming from global trade challenges posed by US tariff policies, may also prompt prospective buyers to be more cautious, added Quek of OrangeTee. 'On the other hand, interest rates have been moderating for the past few months, potentially drawing some investors back into the property market as mortgages become more affordable,' said Quek. 'Moderating interest rates may also help (public housing) upgraders better afford a private condo, assuming employment and real wages hold stable.' Huttons' Lee estimates that around 16 projects generating more than 7,800 homes may be launched for sale in the second half of this year. These include the 683-unit W Residences Marina View in District 1, the 343-unit LyndenWoods in District 5, and the 600-unit Otto Place EC in District 24. But CBRE research head for Southeast Asia Tricia Song reckons with most of these projects located in the Core Central Region and Rest of Central Region – which tend to see higher prices – the monthly sales tally is unlikely to surpass 1,000 units, as seen in previous quarters. The full-year figure may therefore come in at 7,000 to 8,000 units, signalling a slowdown in demand in the next few quarters, said Song. 'There is downside risk to this projection should economic conditions worsen significantly.' Prices may consequently rise 3 to 4 per cent for the year, thanks to a still-low unsold inventory and strong household balance sheets, she said. 'Growth momentum could plateau in the next few quarters on a weaker economic outlook.'
