Canada needs 3.5M more housing units than forecast, report finds

The projected construction of new homes by 2030 won't be enough to solve Canada's supply and affordability issues, the Canada Mortgage and Housing Corp. said in a report Thursday.

In May, CMHC identified supply as “the biggest issue affecting housing affordability,” and that new housing starts have struggled to keep up with the population growth in some of Canada's large cities.

To “restore affordability, Canada will need an additional 3.5 million units” on top of those already in the works, CHMC said Thursday.

“Canada's approach to housing supply needs to be rethought and done differently,” Aled ab Iorwerth, CMHC'S deputy chief economist, said.

“There must be a drastic transformation of the housing sector, including government policies and processes, and an `all-hands-on-deck' approach to increasing the supply of housing to meet demand.”

The latest CMHC report projects that the housing stock will increase by 2.3 million units by 2030, reaching close to 19 million housing units, if current rates of new construction continue.

However, that number “would need to climb to over 22 million ... to achieve affordability for everyone living in Canada,” the report said.

“Put another way, we need the rate of housing starts to more than double,” ab Iorwerth said.

The housing authority said two-thirds of the housing supply gap is in Ontario and British Columbia. Additional supply would also be required in Quebec, since affordability there has markedly declined during the past few years.

The affordability challenge is being exacerbated by labour and supply issues that could limit new supply, ab Iorwerth said, adding it is also an economic risk for large cities that rely on attracting skilled and highly skilled workers.

“We need to get faster and more efficient at building housing units,” he said.

One of his suggestions is to convert underused retail or office space into residential units, something that would require co-operation among the various levels of government and the private sector.

Increasing supply in the rental and ownership market will be “critical” to achieving affordability, the report said.