(Ottawa) Construction of new homes increased slightly in several of Canada’s major cities in the first half of 2023, as the pace of apartment starts helped offset declines in other types of housing, said Thursday the Canada Mortgage and Housing Corporation.

But the agency says it will be difficult to maintain the high pace of apartment construction because of challenges facing developers, such as rising construction costs and rising interest rates.

Of the six cities examined, CMHC noted that Vancouver and Toronto were the only ones to see housing starts increase compared to the same period last year, recording gains of 49% and 32% respectively, surpassing levels observed over the past five years.

In Montreal, a 58% decline in housing starts was observed compared to the first half of 2022, while Edmonton and Ottawa recorded declines of 29% and 18% respectively. Housing starts remained stable in Calgary.

The agency forecasts strong demand for rental housing in the second half of the year, reflecting greater barriers to homeownership caused by high prices and interest rates.

She added that the overall level of new construction activity remained too low to solve Canada’s housing affordability and supply crisis in the long term, and that it would be “paramount to sharply increase” productivity of the construction sector.