00:00:00:00

[Audio: Upbeat rhythmic music plays.]

[Visual: In a studio, Joelle Hamilton sits in an armchair facing a tablet on a table and a microphone on a stand. She has long brown hair and wears a black turtleneck shirt.]

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

Why is understanding rental construction so important?

00:04:00:00

[Visual: Aled Ab Iorwerth sits in an armchair facing a microphone on a stand. He has white hair and a moustache and wears glasses, a white button-down shirt and a blue patterned tie.]

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

Rental is really a key part of the whole housing system in Canada.

00:08:00:00

[Visual: Joelle and Aled sit in the armchairs facing each other. The perspective shifts between close-ups of Joelle and Aled and a side view of the two of them.]

The long-term perspective on the rental sector remains optimistic, but there are challenges in the short term.

00:15:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

What are developers saying about financing and project viability?

00:20:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

We really hope that over the long term, some of these techniques will lower the cost of construction.

00:25:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

What does this mean going forward, and is the outlook improving?

00:29:00:00

[Audio: Upbeat rhythmic music fades out.]

[Visual: On a dynamic red-blue ombré background, translucent black shapes form a row of houses oriented in all directions. A translucent white box with a magnifying glass symbol on the right appears at the centre. Text inside the box reads, “Canada’s housing market.”]

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

You're listening to In-House, Canada's housing podcast, where we share the latest on Canada's housing market.

00:39:00:00

[Audio: Theme music plays.]

[Visual: The text box disappears, and the row of houses multiplies into three rows. The houses deconstruct, reconstruct and reorient themselves. At the centre, white text appears that reads, “In-House – Canada’s Housing Podcast.”]

[Audio: Theme music stops.]

00:46:00:00

[Visual: Joelle and Aled sit in the studio. A box that reads, “Joelle Hamilton, Communications & Marketing, CMHC” appears and then disappears.]

Hi, everyone, and welcome back to In-House, the podcast that takes you behind the headlines of Canada’s housing market. I'm your host, Joelle Hamilton. Today, we’re going to dig into the state of rental construction in Canada. What’s holding developers back? Where are they adapting? And what does it mean for the future of housing affordability? To help unpack the results of CMHC’s latest Canadian Rental Construction Survey, I'm joined by Aled Ab-Iorwerth, one of CMHC’s deputy chief economists. Welcome, Aled.

01:15:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

Thank you.

01:16:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

It's great to have you with us again in our new studio.

01:20:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

Oh, yeah. And it looks very nice.

01:21:00:00

[Joelle laughs.]

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

Well, it was a team effort. It was a team effort. So let’s get started with the big picture. Why is understanding rental construction so important?

01:33:00:00

[Visual: A box that reads, “Aled Ab Iorwerth, Deputy Chief Economist, CMHC” appears and then disappears.]

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

Well, rental is really a key part of the whole housing system in Canada. Obviously, people aspire to own a home, but in many of our large cities, rental has now become very important because home ownership has become so expensive. So having an effective rental system of all types, all varieties is extremely important so that we keep and retain people in our large cities. The young, perhaps they have lower incomes, but this is a very important source of housing.

02:02:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

So let’s dive into this year’s survey results. What are the key takeaways?

02:09:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

The key takeaway, I think, at a high level is that the long-term perspective on the rental sector remains optimistic, but there are challenges in the short term. We’ve heard a lot about the effect of higher interest rates.

02:26:00:00

[Visual: A box appears with text that reads, “SUBSCRIBE” next to a bell symbol and then disappears.]

Obviously, there’s macroeconomic uncertainty because of what’s happening on the international front. So, there’s a lot of short-term concerns. But I think everybody is retaining this optimism in the long term but recognizing these short-term challenges.

02:41:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

According to the survey, what are developers saying about financing and project viability?

02:48:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

They are concerned about costs. I think, as I said, in the long term, they’re being optimistic, but they are being rocked around by financing costs. Higher interest rates are an issue. They’re now having to explore whether they need multiple sources of financing. They’re moving to longer amortization on their programs. So, I think there are struggles. I think the other part that I found interesting in this year’s results was we asked for a little bit more information on development fees. We’ve been hearing a lot about this in the media, that development fees are a concern, and that’s what we were finding in the survey. In some places in Quebec where development fees have historically not played a role, obviously there’s not as much concern. But you’re seeing in Toronto and Vancouver that development fees are a major part of costs. There’s a significant portion of developers for whom development fees are15% to 20% of costs, in Toronto in particular. And even in other places, development fees are more than 10% of costs. So, I think this is a major issue to take a look at.

04:02:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

How are developers adapting to our current economic realities?

04:08:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

According to our survey, they’re developing a broader range of strategies. I think because of uncertainty, but also because they’re seeing the long-term potential of rental, they’re maintaining ownership much more than they used to. So, I think some developers would build and then sell to REITs or whatever. But it seems now that they’re taking a long-term perspective. They’re keeping a hold of these structures and holding them for the long term.

04:40:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

And now I want to talk a little bit about innovation. Are developers adopting modular or prefabricated construction?

04:52:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

To an extent, yes. At a big-picture level, we have a lot of hope in this area. Obviously, as I’ve discussed, there’s a lot of issues around development fees, around regulations. So, I think there are areas to improve for our government. But I think the development and construction industry also need to improve the productivity of what they’re doing, and we’re going to have more research and analysis on that over the coming months. In this survey, what we were interested in finding out was, are people using these new modular techniques or using new technologies? What we found was that a fifth are using modular techniques. Now, on the bright side, you know, people are starting to explore and starting to go into these technologies. So, I think that’s positive. But at 20%, obviously, there’s more room to improve there. We really hope that over the long term, some of these techniques will lower the cost of construction, more offsite manufacturing and so forth. And getting construction costs down will be important to affordability overall.

06:01:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

Will it also accelerate the construction process?

06:04:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

Yes. The whole construction process is very long. As I’ve been discussing, the regulatory approach, which is Toronto-Vancouver, three years, five years plus; Montréal is getting longer as well; Edmonton, it’s getting shorter. So there’s room to improve on regulation by government. But then the actual process of construction of some of these large buildings is a year; for large buildings, it’s probably over two years. And there must be scope to make that faster as well. So, I think everything helps. We need everything across the board, all hands on deck.

06:40:00:00

[Visual: A box appears with text that reads, “SUBSCRIBE” next to a bell symbol and then disappears.]

We need government to work. We need the construction industry to improve. So there’s a lot of scope there for better technologies.

06:49:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

That’s a good segue into my next question. Could you look at opportunities and risks in the future? You know, what does this mean going forward, and is the outlook improving?

07:02:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

Well, according to our survey, a lot of the developers are optimistic in the long run. I think around half were optimistic in the long run. So, I think there are opportunities for more development. Our recent supply gap reports highlighted how much more housing we need, and certainly more rental construction is an important part of that. So, there are opportunities there to produce more, to increase supply. But then as we discussed, there’s also the opportunity to build better, build lower cost and build faster.

07:39:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

So, this was a quick one. It’s actually already a wrap on our podcast today. Thank you so much, Aled, for joining us and for giving us some insights into the minds of developers thanks to the Canadian Rental Construction Survey.

07:53:00:00

[Speaker: Aled Ab Iorwerth, Deputy Chief Economist, CMHC]

Thank you.

07:55:00:00

[Speaker: Joelle Hamilton, Communications & Marketing, CMHC]

And thank you to our listeners. You can read the full results from the 2025 Rental Construction Survey. Just check the episode description below.

08:02:00:00

[Audio: Upbeat rhythmic music plays.]

[Visual: White text that reads “In-House – Canada’s Housing Podcast” appears in front of rows of translucent black houses on a shifting red-blue ombré background. The houses deconstruct, reconstruct and reorient themselves.]

Did you know we're not just on YouTube?

08:07:00:00

[Visual: The white text slides up and disappears, replaced by white logos for Spotify, Apple Podcasts and Amazon Music.]

You can now find us on Spotify, Apple Podcasts and Amazon Music.

08:11:00:00

[Visual: The logos slide up and disappear, replaced by white text that reads, “Don’t miss our next episodes!” Three translucent white rectangles with the words “Share, Follow” and “Subscribe” inside appear below the text. Then, the rectangles become solid, and the letters turn transparent.]

Don’t miss our next episodes for more real, data-driven discussions. If you’re learning from and/or enjoying this podcast, please share this episode, follow us or subscribe.

08:22:00:00

[Visual: The text and boxes disappear, replaced by white text that reads, “See you next time!”]

Reach out, let us know what you think. Thanks for listening and see you next time.

08:30:00:00

[Visual: The Canada wordmark and CMHC logos appear on a white background.]

[Audio: Music fades out.]