Canada’s housing supply gap has narrowed slightly since last year, but Canada Mortgage and Housing Corporation (CMHC) projects the country will still have a shortfall of 3.45 million housing units. by 2030 so that housing is affordable for most Canadians.
A CMHC report released Wednesday revised that estimate down from 3.52 million in its June outlook last year. Ontario is still making up most of the deficit, with a supply shortfall of 1.46 million. However, this figure is lower than the 1.85 million predicted last year.
Quebec, British Columbia, Alberta and Nova Scotia all saw the supply gap widen compared to last year’s projections.
The report also says Canada is expected to build fewer new homes, not more, by 2030. Last year, CMHC said there would be 18.58 million new homes by 2030; this year, that projection fell to 18.19 million.
“This report once again highlights the crucial role that increasing the supply of housing plays if the goal is to make housing affordable for everyone in Canada. It also demonstrates the importance of examining economic and demographic variables given recent changes in both,” said Aled ab Iorwerth, Deputy Chief Economist at CMHC, in the report.
Growing population rates, fueled in part by historic immigration levels, are believed to be one factor behind the high supply gap, CMHC noted.
However, according to the report, despite high levels of immigration, “the number of households in the country will not be significantly higher in 2030 than predicted last year.” The report adds that the growth rate of Canada’s population is expected to decline after 2025, when current immigration policy ends and Canada sets new immigration targets. Currently, the federal government aims to welcome 500,000 new permanent residents to the country in 2025.
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However, if current immigration trends continue through 2030, the projected housing shortage could reach four million homes, CMHC said.
“Indeed, the increase in population and the increase in income it generates increases the demand for housing,” the report states.
He added that in a scenario where Canada experiences lower-than-expected economic growth and current immigration policies end in 2025, the deficit would shrink significantly, but the country would still be short 3.1 million units.
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