Canada will still need approximately 3.5 million more homes by 2030 in order to restore affordability, but changing economic and demographic conditions may affect that figure for better or worse.
In a report released on Wednesday, the Canada Mortgage and Housing Corporation (CHMC) estimates that 3.45 million units will be needed in addition to the number of homes already projected to be built by 2030 in order to restore affordability to 2004 levels.
While the supply gap has narrowed slightly from the 3.52 million units forecasted in a June 2022 report, the projection for the overall housing stock has tightened, too. Amidst falling construction levels, the high cost of materials, and persistent labour shortages, CMHC expects there will be 18.6 million housing units in Canada in 2030, a decline of 390,000 units from 2022 estimates.
In this baseline scenario, the shortfall remains largely unchanged on a national level, but the anticipated supply gap has widened in several provinces due to changing economic and demographic factors, both of which impact demand for housing.
For example, projected 2030 incomes per household in Ontario and British Columbia have fallen compared to last year’s report, as CMHC was "too optimistic about economic growth" in the provinces post-pandemic. As a result, demand for housing will be lower.
Based on recent immigration trends and migration patterns, a smaller number of households are expected in Ontario and Alberta come 2030, again pointing to decreased demand, while British Columbia, Quebec, and Atlantic Canada are projected to see higher household formation at the turn of the next decade, and a coinciding rise in demand.
As a result, the projected housing supply gap in Ontario has fallen to 1.48 million units; in 2022, the province was expected to need an additional 1.85 million units by 2030 in order to restore affordability. Despite the dip, Ontario will still face the largest gap in Canada.
The estimated housing supply gap has shrunk to 170,000 units in Manitoba and to 60,000 units in Saskatchewan. Meanwhile, the gap is expected to widen to 860,000 units in Quebec, to 610,000 units in British Columbia, to 130,000 units in Alberta, and to 70,000 units in Nova Scotia.
"This latest report reinforces the need for urgent action to increase housing supply to make housing affordable for everyone in Canada and continues our work on improving the understanding of what drives housing demand and supply," said Aled ab Iorwerth, Deputy Chief Economist for CMHC.
In addition to the aforementioned baseline scenario, the report offers two additional projections for what the housing supply gap could look like in 2030, one based on low economic growth, and the other based on high population growth.
Under the former, Canada’s housing supply gap falls to 3.1 million units come 2030 as productivity growth slumps, consumer demand weakens, and inflation remains above the Bank of Canada’s target. In the latter, the federal government’s immigration targets continue at their current elevated rate past 2025, and the housing supply gap climbs to 4 million units in 2030.