Ontario Construction News staff writer
Canada will need to build between 430,000 and 480,000 new homes annually over the next decadeโabout twice the current pace of constructionโto return to housing affordability levels last seen in 2019, according to new estimates released by the Canada Mortgage and Housing Corporation (CMHC).
The updated report from CMHC also breaks down housing supply gaps in the countryโs largest urban centres, revealing specific targets for both the ownership and rental markets to meet projected demand. These new estimates mark the first time CMHC has provided city-level data showing the additional number of housing starts required beyond those already expected in a โbusiness-as-usualโ scenario.
“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,” said Aled ab Iorwerth, CMHCโs deputy chief economist. “It will also require significant innovation in construction technology and growth in labour productivity.”
Montrรฉal faces the largest housing supply gap of all Canadian Census Metropolitan Areas (CMAs), the report says. Since the pandemic, homeownership costs in the city have risen faster than in any other major CMA, outpacing local income growth. CMHC calls for a substantial increase in both rental and ownership housing to curb the worsening affordability crisis.
Toronto would need to increase homebuilding by 70 per cent over the next 10 years to improve affordability, particularly in the ownership market. Despite recent gains in rental housing construction, the city lacks sufficient supply for prospective homeowners.
In Vancouver, the region would need an estimated 7,200 additional homes annuallyโabout a 29 per cent increase above current trends. CMHC notes that the 33,000 housing starts recorded in 2023 indicate the region is moving in the right direction.
Calgary, which has seen record homebuilding levels for three straight years, would still need to build 45 per cent more homes each year to meet affordability targets.
Ottawa-Gatineau holds the second-largest supply gap among major CMAs. Although homebuilding rose from 2021 to 2023, it has not kept up with post-pandemic demand.
In contrast, Edmonton is the only major city where projected housing supply is expected to be sufficient to maintain market affordability through 2035. However, CMHC cautions that this does not reflect other housing issues in the city, including homelessness.
Provincial outlook
Ontario, Nova Scotia, and British Columbia are facing the largest housing supply shortfalls among provinces. All three experienced some of the steepest increases in housing costs during and after the pandemic.
Long-term outlook
CMHCโs housing estimates are based on a 10-year outlook, with this yearโs report targeting affordability levels by 2035. The goal is to provide a realistic benchmark aligned with the timelines of large-scale housing development.
The report focuses on market housing affordability for average-income households. It does not specifically address the needs of low-income households or individuals experiencing homelessness, although CMHC acknowledges those as ongoing challenges requiring separate strategies.
CMHCโs previous research suggests Canadaโs homebuilding sector has the capacity to exceed 400,000 new homes per year, but reaching that potential will require systemic change across the housing industry.
For more details, the full 2024 Housing Supply Gaps Estimate is available on the CMHC website.