Homebuilding must nearly double over next decade to restore affordability, says CMHC
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The Canada Mortgage and Housing Corporation (CMHC) says in a new report that the number of new homes built each year in the country needs to nearly double over the next decade to restore housing affordability.
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The agency estimates that between 430,000 and 480,000 new housing units a year are needed to close a supply gap that has led to higher home prices.
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The report flagged Montreal as the major city with the largest supply gap, where both rental construction and new units for home purchases need to be increased, followed by Ottawa-Gatineau.
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'Current trends show housing affordability challenges will become much more acute if housing supply is not significantly increased,' CMHC said.
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The housing agency said the focus is on restoring affordability to levels last seen in 2019, just before a surge in the cost of housing during the global COVID-19 pandemic, because restoring affordability levels seen two decades ago is 'no longer realistic.' Meanwhile, decades of housing affordability challenges in Toronto and Vancouver will take more time to address.
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'Doubling the pace of housing construction in Canada is achievable, but not without a significantly larger and modernized workforce, more private investment, less regulation, fewer delays, and lower development costs,' said Aled ab Iorwerth, deputy chief economist for CMHC. 'It will also require significant innovation in construction technology and growth in labour productivity.'
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Toronto, Canada's largest city, also has a sizeable supply gap, according to the housing agency, which estimates that a 70 per cent increase in homebuilding over the next decade would be necessary to help ease affordability issues.
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'Despite increased rental construction in recent years, the region is lacking homeownership options that match local incomes,' the report said.
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The s upply gap is less severe in Vancouver, which was among Canada's most expensive markets for several years. The city needs an additional 7,200 homes built annually — 29 per cent more than planned in a 'business as usual' scenario — to close the supply gap. In 2023, more than 33,000 housing starts were recorded in Vancouver's census metropolitan area, according to CMHC.
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