Canada’s housing supply gap has shrunk marginally since last year, but the Canada Mortgage and Housing Corporation (CMHC) projects the country will still be short 3.45 million homes by 2030 in order for housing to be affordable for most Canadians.
A CMHC report released on Wednesday revised that estimate down from 3.52 million in its outlook from June of last year. Ontario still makes up most of the shortfall, with a 1.46 million supply gap. However, that is down from the 1.85 million projected last year.
Quebec, B.C., Alberta and Nova Scotia all saw the supply gap widen compared with projections from last year.
The report has also said Canada is projected to build fewer, not more, new homes by 2030. Last year, CMHC said there would be 18.58 million new housing units by 2030; this year, that projection is down to 18.19 million.
“This report again highlights the crucial role of increasing housing supply if the goal is to make housing affordable for everyone in Canada. It also demonstrates the importance of examining both economic and demographic variables given the recent changes that have been experienced in both,” Aled ab Iorwerth, deputy chief economist at CMHC, said in the report.
Growth in population rates, fuelled in part by historic immigration levels, is said to be among the factors behind the high supply gap, CMHC noted.
However, the report said despite high immigration levels, “the number of households in the country won’t be significantly higher in 2030 than last year’s projection.” The report added that Canada’s population growth rate is set to fall after 2025, when the current immigration policy comes to an end and Canada sets new immigration targets. Currently, the federal government aims to welcome 500,000 new permanent residents to the country in 2025.
However, if current immigration trends continue to 2030, the projected shortfall in housing units could be as high as four million homes, CMHC said.
“This is because the higher population, and larger pool of income it brings, increase demand for housing,” the report said.
It added that in a scenario where Canada sees lower-than-expected economic growth and the current immigration policies end in 2025, the shortfall would come down significantly, but the country would still be short 3.1 million units.