New report outlines the astronomical cost needed
A far larger amount of investment will be needed to achieve housing affordability in Canada, according to a new study by Canada Mortgage and Housing Corporation (CMHC).
The estimate followed the Crown corporation’s projections of Canadian housing stock needing to exceed 22 million housing units by 2030 to achieve affordability for all.
“This translates to an additional 3.5 million new housing units beyond what will be built anyhow,” said the report penned by Aled ab Iorwerth, CMHC’s deputy chief economist. “A rough estimate suggests this amounts to an investment of at least $1 trillion.”
“This enormous amount of money means Canada’s approach to housing supply needs to be rethought and done differently. There must be a drastic transformation of the housing sector. We need an ‘all-hands-on-deck’ approach to increasing the supply of housing to meet constantly growing demand.”
CMHC stressed the need to quickly increase market supply, both for rental and for home ownership.
“This includes boosting market-driven processes to help us achieve affordability,” CMHC said. “New supply of market housing will gradually make older housing units more affordable. This filtering process needs to be accelerated as it unfortunately takes time.”
The Canadian federal government has introduced Bill C-56, the Affordable Housing and Groceries Act, as part of its efforts to boost housing supply and stabilize grocery prices.
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 25, 2023
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Private sector contributions should not be dismissed
CMHC said that any effective affordability solution would require both government policy and participation from the private sector.
“The scale of the challenge is so large that the private sector must be involved — governments cannot do this on their own,” CMHC said. “In the coming weeks and months, we will renew our arguments on the causes of housing unaffordability and make the case to support massive investment from the private sector in housing.”
The Crown corporation acknowledged that while some quarters might criticize this step as “financialization”, private ownership remains essential.
“Our pressing need for more housing supply — particularly purpose-built rental housing — means that the private sector needs appropriate incentives to invest the massive sums required,” CMHC said. “Given the positive role private ownership can bring, the activities of some bad actors need to be addressed through effective regulation rather than blaming the whole industry.”
