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Economic Viewpoint

Start Me Up: Estimating the Impact of Recent Housing Supply Measures on Housing Starts in Canada

September 10, 2024
Marc Desormeaux, Principal Economist • Kari Norman, Economist • Randall Bartlett, Senior Director of Canadian Economics

In this note, we estimate what the recently announced federal homebuilding policies could mean for housing starts, with implications for housing affordability and Canadians’ quality of life.

 

The federal government forecasts that Canada’s Housing Plan could translate into an additional 1M net new homes by 2031. If those projections come to fruition, before the end of the decade Canadian housing starts could exceed the previous annual record of 273K reached in 1976. And that’s half the number of net new homes the federal government claims should be built over that period because of its efforts.

 

But those numbers are arguably optimistic given regulatory hurdles and constraints on labour, materials and financing. They would also still leave us well short of the 3.5M additional homes (and 5.8M total) that the Canada Mortgage and Housing Corporation (CMHC) estimates is necessary to restore affordability by 2030.

 

Even if Canada can’t meet its targets, the housing supply crisis can still be lessened through increasing homebuilding by however much is feasible. Going forward, governments should focus on regulations, financing costs and labour supply for construction, areas over which they have the most influence.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.