OTTAWA, Jan. 29, 2024 (GLOBE NEWSWIRE) -- Canada faces a substantial housing shortage which has led to rapid increases in house prices and rental rates, and while steps have been taken to relieve pressure on these issues, a more concerted effort is needed to address shortages and affordability, according to new research from The Conference Board of Canada.
“Population growth is a major factor, but a prolonged period of low interest rates and an accumulation of excess savings during the pandemic have been big contributors to Canada’s housing shortage,” according to Michael Burt, Vice President at The Conference Board of Canada. “Additionally, we haven’t been building enough homes in Canada for more than a decade, which limits our options for quick solutions.”
While lending cost relief appears to be on the horizon in 2024, builders face many hurdles for achieving a higher sustained pace of construction activity at more affordable prices. These challenges include interest rates and taxation rates, along with difficulties sourcing land and labour. Builders also face rapidly rising municipal development charges. Because such levies are intended to fund residentially related municipal capital projects, they are indexed to the soaring residential construction cost index.
Governments at various levels have taken steps to help mitigate the costs levied on builders in an effort to increase supply. They’ve also taken steps to help the industry find workers, have adjusted zoning laws to allow higher density, and added greenfield land. Labour supply shortages are top of mind for many developers with the Canadian Home Builders’ Association recently reporting that 46.0 per cent of its members struggled to hire tradespeople and suggesting that trades’ costs had risen by more than a quarter since the pandemic.
According to The Conference Board of Canada, fixing Canada’s housing will take a multi-pronged approach. Reducing development costs, loosening zoning regulations and limiting delays on permit approvals can create savings for builders that can be passed down to prospective buyers. A variety of new building techniques could also help boost supply. These start with the widespread adoption of prefabricated or modular homes, which can be built more quickly, use fewer materials and reduce construction waste.
On the demand side, Canada could reduce its intake of newcomers until the housing supply catches up. The recent surge in immigration is spurred by rising arrivals of both permanent and non-permanent residents. From the start of 2022 to the third quarter of 2023, 1.9 million net immigrants have arrived in Canada. At the 2021 census estimate of 2.4 persons per household, more than 790,000 units would be required to house them –well outpacing the typical pace of home construction in this country.
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The Conference Board of Canada is the country’s leading independent research organization. Since 1954, The Conference Board of Canada has been providing research that supports evidence-based decision making to solve Canada’s toughest problems. Read more about our impact at the link here. Follow The Conference Board of Canada on Twitter @ConfBoardofCda.
