- Jimmy Jean, Vice-President, Chief Economist and Strategist, Randall Bartlett, Senior Director of Canadian Economics and Kari Norman, Economics Document Production Specialist
Global Housing Supply Success Stories: A How-To for Boosting Home Construction in Canada
Housing in Canada is in crisis. As the situation has become more serious, all levels of government have been forced to recognize that something must be done urgently. But while sharply higher supply is widely recognized as the path forward, there is little agreement on how to make that happen.
Governments can take numerous measures to increase the supply of housing in Canada. Those discussed in this report are extensive but are by no means exhaustive. The most important takeaway from this analysis is that there is no silver bullet that will solve Canada’s housing crisis. Instead, it is a combination of different policies introduced by all levels of government in a coordinated fashion that will help to increase homebuilding.
At the federal level, providing transfers to incent homebuilding is key. The Housing Accelerator Fund is a good start. However, it’s insufficient to move the needle and has been woefully lacking in its execution. The federal government should listen to other levels of government to improve the targeting of transfers and minimize the frictions that are preventing more homes from being built. It should consider other tax incentives as well, such as foregoing the GST/HST on purpose‑built rental construction. The Government of Canada must also ensure population growth advances at a pace that is sustainable and doesn’t further erode housing affordability. Prioritizing immigrants with skilled trades training would help offset the aging workforce in construction.
At the provincial level, giving municipalities the freedom to introduce measures that will support an acceleration of residential investment in their communities would help considerably. Reducing development charges on some types of housing may have a positive impact, but municipalities shouldn’t be left holding the bag for lost revenues. The boon in short‑term rentals must also be addressed, with the Government of Quebec’s recent introduction of provincial licensing possibly providing a template for the rest of the country.
Many communities are already making great strides in certain areas, but more needs to be done to reduce barriers to home building. Ending exclusionary zoning and moving toward by‑right approvals should be a priority to support increased density. And encouraging retail‑to‑residential redevelopment of existing greyfield sites such as underused shopping malls could add a lot more units in relatively short order. Sharing and implementing best practices from across the country and around the world would also go a long way to making sure everyone in Canada has an affordable place to call home.
Industry has a role to play as well. Construction sector productivity has been lagging behind the general economy for some time. From prefabricated homes to preapproved plans made available by municipalities, there is a lot that can be done to improve productivity. But construction costs from interest rates to inputs have risen considerably in the last couple of years. Governments can use policy to offset this through lower taxes and/or subsidies.
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