- Marc Desormeaux, Principal Economist • Kari Norman, Economist • Randall Bartlett, Senior Director of Canadian Economics
Start Me Up: Estimating the Impact of Recent Housing Supply Measures on Housing Starts in Canada
In this note, we estimate what the recently announced federal homebuilding policies could mean for housing starts, with implications for housing affordability and Canadians’ quality of life.
The federal government forecasts that Canada’s Housing Plan could translate into an additional 1M net new homes by 2031. If those projections come to fruition, before the end of the decade Canadian housing starts could exceed the previous annual record of 273K reached in 1976. And that’s half the number of net new homes the federal government claims should be built over that period because of its efforts.
But those numbers are arguably optimistic given regulatory hurdles and constraints on labour, materials and financing. They would also still leave us well short of the 3.5M additional homes (and 5.8M total) that the Canada Mortgage and Housing Corporation (CMHC) estimates is necessary to restore affordability by 2030.
Even if Canada can’t meet its targets, the housing supply crisis can still be lessened through increasing homebuilding by however much is feasible. Going forward, governments should focus on regulations, financing costs and labour supply for construction, areas over which they have the most influence.
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