The Canadian Mortgage and Housing Corporation released its housing starts for the first six months of 2023, and Montreal saw a steep decline compared to 2022.
New construction is down 58 per cent overall.
Construction of single family homes is down 54 per cent, and for semi-detached and row homes, it's 72 and 76 per cent.
The trend continues for apartments, where construction is down 57 per cent.
"It's a real problem for Canadians," developer Benjamin Sternthal.
He says rising interest rates play a role, but also getting approval to build is long and difficult.
Sternthal said some developers are cancelling projects.
"When you talk about lack of rental housing, there's a lack of rental housing because, at 6.5 per cent interest rate, the numbers don't work. The banks won't finance these projects on tight numbers."
The CMHC says Montreal is already experiencing a housing shortage, and the city is not headed in the right direction.
"Bring more supply to the market, and this is the only way to achieve affordability in the short, medium and long term," said CMHC economist Francis Cortellino.
Mortgage broker Fred Pichette said he sees a lot of people who need help to buy a home. Pichette said now is the right time to drop the mortgage stress test.
"At an interest rate close to 6 per cent we don't really need it," Pichette said. "I understand the purpose of having a stress test back then when the interest was at 2, 3 per cent to protect the banks and also protect Canadians not to be more in debt."
