Stress tests hurting new home construction—The effects of the stress tests (applied to insured mortgages in 2016 and uninsured in 2018) on the residential construction sector have become apparent. Single starts posted their greatest decline in over a decade in 2018, and multiple starts will follow this year with a double-digit contraction.

Major markets still experiencing declines—Vancouver and Toronto are still feeling the impacts from government policies aimed at slowing their housing markets. Both cities will see declines in housing starts this year. However, while there will be prolonged weakness in Vancouver, Toronto is expected to bounce back quickly—aided by new measures to support new home construction.

Continued strength seen in Montréal—Montréal has been experiencing continued growth since 2015, with the bulk of the growth in higher-density properties to better accommodate its aging population. However, the long-term forecast is less favourable than in other Canadian cities as Montréal’s population growth will not keep up with that in Toronto and Vancouver.