A recent report by the Parliamentary Budget Officer (PBO) indicates that Canada will need to build approximately 1.3 million more new homes than currently projected in order to bridge the gap between housing supply and demand. The report suggests that an additional 181,000 units will need to be completed annually until 2030, resulting in a total of 3.1 million net housing units. Canada has been averaging about 188,000 new housing units each year since 2015, with an expected increase to 255,000 annually by 2030. However, the report states that this is not enough to meet the growing demand.
The report defines the housing gap as the projected number of additional housing units required to balance housing demand and supply by 2030. Household formations have surpassed pre-pandemic levels, with an average of 460,000 formations last year. The report predicts that household formations will continue to outpace home completions until 2030, leading to a shortage of available units for families in need. The total vacancy rate in Canada reached a record low of 5.1 percent in 2023, and the imbalance between households and completed homes is expected to push the vacancy rate down further in the coming years.
In response to the housing crisis, the federal government has announced several initiatives aimed at increasing housing supply. Prime Minister Justin Trudeau unveiled a $600 million plan to boost pre-fabricated housing and a $6 billion housing infrastructure fund that would allow for four-unit dwellings by default in municipal zoning rules. The government is also focusing on promoting “missing middle homes,” such as duplexes, triplexes, and townhouses, to increase the variety of available housing options. Housing Minister Sean Fraser has emphasized the importance of streamlining the approval process for new housing developments to enable faster construction.
The PBO report references data from Statistics Canada and the Bank of Canada, highlighting the impact of population growth and increased immigration on the demand for housing in Canada. The Bank of Canada’s Monetary Policy Report noted that a larger influx of newcomers is contributing to the housing market’s structural supply constraint and record low vacancy rates. Fraser expressed concerns about reaching a ceiling on the number of homes that can be built in Canada and stressed the need for the federal government to support the industry in expanding at a faster pace. The government’s focus is on working with partners to implement changes that will facilitate the construction of more homes to meet the growing demand for housing in the country.
