Canada Mortgage and Housing Corp. estimates that getting housing affordability back to levels seen in 2019 will require that between 430,000 and 480,000 units be built annually over the next decade, double the current pace of construction.
CMHC, a Crown corporation with functions that include advising the federal government on housing policy, maintains that the homebuilding industry is capable of building more than 400,000 new units per year.
"Doubling the pace of housing construction in Canada is achievable, but not without a significantly larger and modernized workforce, more private investment, less regulation, fewer delays, and lower development costs. It will also require significant innovation in construction technology and growth in labour productivity," said Aled ab Iorwerth, deputy chief economist for CMHC, in a commentary.
The commentary added that "by estimating housing supply gaps across Canada, our goal is to ensure policymakers from all orders of government, as well as the private sector, understand the scale of the challenge. Systemic changes are essential if we are to double the pace of homebuilding in Canada."
The Canadian Real Estate Association said last week that its benchmark price index for all housing was just under $700,000 last month, down close to 20% from its 2022 peak. However, in 2019, that benchmark price was just under $550,000.
Toronto will need a 70% increase in homebuilding over the next decade to improve affordability issues, despite increased rental construction in recent years, said CMHC.
"The region is lacking homeownership options that match local incomes," said the Crown Corp. in a statement.
Vancouver, Montreal face housing gaps
Vancouver needs an estimated 7,200 units built for the next decade to increase, a figure that amounts to a 29% gain in housing.
CMHC said Montreal faces the largest housing supply gap among the country's large metropolitan areas. Current trends show that housing affordability challenges will become much more acute if the housing supply is not significantly increased.
"Since the pandemic, and when compared to local incomes, homeownership costs in Montreal have risen faster than any of the large" (metropolitan areas,) according to the Crown corporation.
As part of his mandate, Prime Minister Mark Carney has vowed to build up to 500,000 housing units annually across the country.
Toronto-Dominion Bank published a report this month questioning whether the governing Liberal party can meet those targets.
The government has expressed a desire to boost new supply through policy changes, including cutting the goods and services tax on new homes, lowering development charges, and making favourable changes around tax incentives for purpose-built rental construction.
"These measures are likely to fall well short of closing the gap between what is currently completed and what the government is targeting," said the bank in a report.
TD said 400,000 new units might be enough to improve affordability, but it questioned how that could be achieved and suggested it would require an "unprecedented boost in productivity" that requires a revolution in how housing is developed.
