CMHC: Housing starts to fall short of demand even under best-case scenarios

The gap between construction and demand is expected to be as much as 3.5 million units by 2030, Crown corporation says

CMHC: Housing starts to fall short of demand even under best-case scenarios

Even under the most optimistic scenarios, housing starts are likely to end up significantly lower than the 2030 affordable housing supply targets established by the Canada Mortgage and Housing Corporation, the agency said in a new report.

Markets that will be particularly affected are British Columbia, Ontario, and Quebec.

“Two-thirds of the 3.5 million housing unit gap are in Ontario and British Columbia,” CMHC said. “These two provinces have housing markets that are not affordable, and they have faced large declines in affordability.”

Only Alberta is expected to achieve its affordable housing supply target by 2030.

“We didn’t think the challenges were this acute,” said Dana Senagama, report co-author and senior specialist in market insights at CMHC. “We thought that there was more capacity in order to achieve these goals. These provinces are going to have problems, but how much they will have… is what was more surprising.”

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“There are significant barriers to achieving this quantity of supply,” CMHC said. “Currently, skills shortages and supply-chain challenges are pushing up construction costs – meaning it can take more time to build.”

Complicating matters are the long-standing challenges posed by regulatory red tape, CMHC added.

“It can take many years to obtain approval for new construction in some parts of Canada. Without any means of lowering Canadians’ demand for housing, increased housing supply is the only means of achieving affordability.”

Senagam suggested an intensified focus on building apartments to address the lack of supply.

“Labour is able to get more things done within the same building, so it’s easier to move equipment and cranes as opposed to in those big, low-rise subdivisions, where it appears … that more workers are needed to move between one house and another,” Senagam said.