Canada needs 3.5 million more homes than projected to restore affordability, says CMHC

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Projected construction of new homes by 2030 won’t be enough to solve Canada’s supply and affordability issues, the Canada Mortgage and Housing Corporation (CMHC) said in a report Thursday.

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

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

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

“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 if current rates of new construction continue, housing stock will increase by 2.3 million units between by 2030, reaching close to 19 million housing units by 2030.

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

The housing authority said two-thirds of the housing supply gap is found in Ontario and British Columbia, provinces that have faced large declines in affordability in recent years.

Additional supply would also be required in Quebec, as affordability in the province has declined markedly over the last few years.

“Over the last 20 years in Canada, housing supply has not responded to demand, especially in some of the country’s large urban areas, resulting in the loss of affordability,” CMHC said.

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