Fewer new homes are being built across the London area this year, and experts say that could cause bigger problems down the road.
From January to May, only 420 new homes were started in the region including London, Strathroy, St. Thomas, and parts of Elgin and Middlesex counties. That’s a drop of more than 70 per cent compared to the same time last year.
The biggest drop was in townhouses and apartments. Builders had been hoping for a busy year, but economic concerns and higher prices have made both buyers and developers more cautious.
“People are still worried about where things are at in the economy,” said Jared Zaifman, head of the London Home Builders’ Association. “They want things to settle down before making a big purchase like a house.”
Zaifman says some builders have put their plans on pause. With fewer people looking to buy, many don’t want to risk building homes they might not sell. Some are still working on projects, but others are holding off until demand picks up again.
This slowdown could create a housing shortage later. If buyers return in large numbers, there might not be enough homes ready to meet the demand. That could lead to rising prices something London has already seen in recent years.
“We don’t want to end up with too little supply when people are ready to buy again,” said Zaifman.
To help, the federal government recently introduced a GST rebate for first-time homebuyers. Zaifman says it’s a step in the right direction, but thinks it would help more if the rebate applied to everyone.
Builders are also hoping for more support from the province, such as delaying costly fees until a home is sold or occupied.
If the slowdown continues, London could find itself short on homes just as more people are looking to move in and that could make housing even harder to afford.