Canada’s Housing Supply Shortage: Restoring affordability by 2030

June 23, 2022

Canada’s Housing Supply Shortages: Estimating what’s needed to restore affordability in Canadian provinces by 2030

In 2018, the creation of housing supply responsiveness was identified as a challenge. Our 2018 report indicated that demand for housing increased for multiple reasons but housing supply in many large Canadian cities did not respond to demand.

In this report, we have taken the initial steps to estimate how much additional housing supply is required to restore housing affordability by 2030.

If the current rates of new construction continue, we project that the housing stock will increase by 2.3 million units between 2021 and 2030. This will reach close to 19 million housing units by 2030.

To restore affordability, an additional 3.5M affordable housing units are needed by 2030

That means over 22 million housing units will be required by 2030 to help achieve housing affordability for everyone living in Canada. Delivering more housing supply, beyond predicted growth in the number of households, will enable better matching of households with the housing they want.

“… Canada’s approach to housing supply needs to be rethought and done differently. There must be a drastic transformation of the housing sector, including government policies and processes, and an ‘all-hands-on-deck’ approach to increasing the supply of housing to meet demand.”
— Aled ab Iorwerth, Deputy Chief Economist, CMHC

Affordability has changed over time and not for the better

The last time housing was affordable was in 2003 and 2004. Housing prices during this period implied that housing costs were affordable — what we are calling the Maximum Affordable Price level.

Around 2003 and 2004, an household on average income would have had to devote close to:

  • 40% of their disposable income to buy an average house in Ontario
  • 45% of their disposable income to buy an average house in British Columbia.

In 2021, a household on average income would have had to devote close to 60% of their incomes to housing

Shelter cost as a share of disposable income when the average household buy the average house (based on MLS® prices)

Source: CMHC calculations based on data from CMHC, Statistics Canada, Conference Board of Canada, CREA, Bank of Canada and Altus

Text Version

Shelter cost as a share of disposable income when the average household buy the average house (based on MLS® prices)
Year British Columbia Ontario Canada Quebec Alberta Other provinces
1990 55.6% 57.2% 52.0% 43.1% 38.4% 34.6%
1990 55.2% 57.1% 51.6% 43.1% 37.9% 34.6%
1991 52.2% 53.9% 49.4% 41.2% 35.7% 33.0%
1991 51.0% 51.6% 48.1% 39.9% 34.6% 32.1%
1991 50.8% 50.0% 47.5% 39.3% 34.2% 31.5%
1991 50.3% 48.1% 46.3% 38.4% 33.4% 30.5%
1992 50.1% 45.8% 44.9% 37.8% 33.0% 30.2%
1992 50.0% 43.9% 43.9% 36.9% 32.3% 29.9%
1992 49.7% 42.4% 43.1% 36.0% 31.7% 29.4%
1992 50.1% 41.6% 42.8% 35.4% 31.2% 29.0%
1993 50.8% 40.7% 42.4% 34.9% 30.8% 28.5%
1993 52.2% 40.3% 42.4% 34.8% 30.8% 28.5%
1993 52.4% 39.6% 41.8% 34.2% 30.4% 28.2%
1993 51.7% 38.8% 41.0% 33.5% 30.0% 27.6%
1994 51.4% 38.6% 40.8% 33.1% 29.8% 27.5%
1994 53.2% 39.8% 42.1% 34.0% 30.3% 28.1%
1994 57.3% 41.6% 44.2% 35.2% 31.3% 29.4%
1994 61.2% 43.2% 46.0% 36.5% 32.5% 30.6%
1995 62.7% 43.1% 45.9% 36.5% 32.6% 30.5%
1995 59.2% 41.5% 43.8% 35.4% 31.7% 29.6%
1995 56.1% 40.3% 42.4% 34.5% 31.0% 28.9%
1995 52.9% 38.8% 40.7% 32.9% 30.2% 28.3%
1996 51.8% 37.8% 39.8% 32.0% 29.8% 28.1%
1996 51.7% 37.4% 39.3% 31.3% 29.3% 28.0%
1996 50.8% 37.1% 38.9% 31.5% 28.9% 28.1%
1996 49.8% 36.6% 38.4% 31.3% 28.1% 27.9%
1997 48.4% 35.7% 37.5% 30.9% 27.4% 27.6%
1997 47.6% 35.3% 37.0% 30.5% 27.2% 27.5%
1997 47.3% 35.5% 36.9% 30.5% 27.1% 27.6%
1997 46.5% 35.1% 36.3% 30.5% 26.8% 27.2%
1998 46.1% 34.6% 35.8% 30.3% 26.7% 27.1%
1998 46.3% 34.7% 35.8% 30.6% 27.3% 27.2%
1998 46.1% 35.1% 35.9% 30.9% 27.7% 27.2%
1998 45.0% 34.8% 35.3% 30.5% 27.5% 26.6%
1999 43.9% 34.2% 34.8% 30.3% 27.4% 26.1%
1999 43.7% 33.9% 34.6% 29.9% 27.5% 26.0%
1999 44.4% 34.4% 35.2% 30.3% 28.1% 26.3%
1999 45.9% 35.4% 36.2% 30.9% 28.9% 26.8%
2000 47.7% 36.3% 37.1% 31.2% 29.7% 27.5%
2000 48.9% 36.8% 37.6% 31.1% 30.3% 28.1%
2000 48.8% 36.8% 37.4% 30.5% 30.0% 28.1%
2000 47.2% 36.5% 36.9% 30.2% 29.2% 27.9%
2001 45.0% 35.8% 35.8% 29.6% 27.7% 27.2%
2001 43.9% 35.6% 35.3% 29.1% 27.0% 27.1%
2001 43.4% 35.2% 34.9% 28.6% 26.4% 27.0%
2001 43.3% 35.4% 35.0% 28.4% 26.4% 26.9%
2002 42.6% 35.3% 34.8% 28.2% 26.4% 26.5%
2002 42.7% 35.8% 35.3% 28.7% 27.1% 26.7%
2002 42.7% 36.3% 35.7% 29.2% 27.8% 26.8%
2002 42.5% 36.6% 35.9% 29.8% 28.1% 26.8%
2003 41.7% 36.4% 35.7% 29.8% 27.9% 26.4%
2003 41.6% 36.2% 35.6% 30.0% 27.9% 26.4%
2003 42.1% 36.3% 35.9% 30.4% 28.0% 26.5%
2003 43.4% 36.7% 36.6% 31.0% 28.4% 26.8%
2004 44.0% 36.9% 36.9% 31.3% 28.2% 26.8%
2004 44.6% 37.2% 37.2% 32.0% 28.1% 27.1%
2004 44.5% 37.5% 37.2% 32.3% 27.8% 27.2%
2004 45.3% 38.3% 37.8% 32.9% 27.9% 27.6%
2005 45.8% 38.7% 38.1% 33.1% 28.1% 27.9%
2005 46.4% 38.9% 38.5% 33.3% 28.1% 28.0%
2005 47.2% 38.9% 38.7% 33.4% 27.8% 28.1%
2005 48.4% 39.2% 39.1% 33.7% 28.0% 28.3%
2006 49.9% 39.5% 39.9% 34.2% 28.8% 28.6%
2006 50.7% 39.5% 40.3% 34.4% 30.2% 28.7%
2006 50.1% 38.6% 39.7% 33.7% 30.8% 28.1%
2006 48.9% 37.3% 38.6% 32.7% 31.1% 27.3%
2007 47.5% 36.7% 38.0% 32.3% 31.5% 26.5%
2007 48.4% 37.4% 38.8% 32.5% 33.5% 27.0%
2007 51.0% 38.6% 40.6% 33.8% 36.0% 28.1%
2007 54.4% 40.0% 42.4% 35.0% 37.8% 29.5%
2008 56.2% 40.2% 42.8% 35.5% 38.3% 29.9%
2008 55.4% 39.8% 41.8% 35.0% 37.1% 29.8%
2008 52.8% 38.5% 39.9% 34.0% 35.5% 29.1%
2008 50.0% 37.4% 38.1% 33.4% 33.9% 28.6%
2009 47.0% 35.5% 36.1% 32.3% 32.3% 27.7%
2009 45.7% 34.4% 35.2% 31.4% 31.3% 27.2%
2009 45.6% 34.1% 35.3% 30.9% 30.8% 26.5%
2009 47.1% 35.0% 36.4% 30.9% 31.4% 26.4%
2010 47.3% 35.6% 36.6% 31.3% 31.1% 26.1%
2010 48.4% 35.6% 36.9% 32.0% 31.6% 26.8%
2010 48.5% 35.5% 36.6% 32.4% 31.2% 27.0%
2010 49.4% 35.2% 36.6% 32.4% 31.3% 27.2%
2011 49.8% 35.3% 36.6% 32.0% 30.3% 26.6%
2011 52.2% 36.3% 37.7% 32.9% 30.5% 26.9%
2011 53.4% 37.4% 38.6% 33.5% 30.7% 27.5%
2011 52.2% 37.9% 38.4% 33.8% 30.2% 27.5%
2012 49.7% 37.5% 37.4% 33.1% 29.4% 27.0%
2012 47.8% 37.5% 36.9% 33.0% 28.8% 26.8%
2012 47.5% 38.1% 37.3% 33.7% 29.0% 27.1%
2012 47.5% 38.7% 37.7% 34.3% 29.4% 27.7%
2013 48.1% 39.3% 38.2% 34.8% 29.8% 28.0%
2013 48.1% 39.4% 38.3% 34.5% 30.0% 28.0%
2013 49.5% 40.3% 39.2% 34.9% 30.4% 28.2%
2013 52.0% 41.7% 40.9% 35.7% 31.2% 29.0%
2014 54.1% 43.2% 42.4% 36.6% 32.2% 29.7%
2014 54.6% 44.0% 42.9% 36.9% 32.6% 30.0%
2014 54.5% 44.0% 42.8% 36.5% 32.4% 29.7%
2014 54.5% 44.1% 43.0% 36.3% 32.2% 29.5%
2015 55.2% 44.3% 43.0% 36.1% 31.4% 29.1%
2015 55.9% 44.7% 43.4% 36.0% 31.1% 29.1%
2015 56.7% 44.9% 43.7% 35.9% 30.7% 28.8%
2015 58.5% 44.9% 44.5% 35.9% 31.1% 28.8%
2016 61.9% 45.9% 46.3% 36.0% 32.0% 28.9%
2016 63.2% 47.5% 47.7% 36.1% 32.9% 28.9%
2016 61.2% 49.3% 48.2% 36.0% 33.7% 29.0%
2016 56.8% 50.6% 47.5% 35.9% 33.7% 28.6%
2017 55.3% 52.6% 47.8% 35.8% 33.6% 28.6%
2017 55.1% 51.8% 47.0% 35.0% 32.5% 28.0%
2017 55.2% 49.7% 45.7% 34.2% 31.3% 27.6%
2017 55.2% 47.2% 44.3% 33.8% 30.4% 27.3%
2018 56.6% 46.9% 44.3% 34.4% 30.9% 27.9%
2018 58.2% 47.7% 45.0% 35.3% 31.6% 28.6%
2018 58.6% 48.5% 45.3% 36.1% 32.1% 28.9%
2018 57.6% 49.8% 45.5% 36.6% 31.9% 28.6%
2019 55.7% 50.2% 45.0% 36.7% 31.4% 28.5%
2019 53.8% 49.5% 44.0% 36.1% 30.8% 28.3%
2019 52.5% 48.2% 43.2% 35.4% 30.2% 28.1%
2019 52.6% 47.8% 43.2% 34.9% 29.8% 28.0%
2020 53.5% 48.6% 43.8% 35.3% 30.0% 28.3%
2020 54.2% 49.1% 44.0% 36.2% 30.4% 28.7%
2020 54.6% 50.5% 44.9% 37.1% 31.0% 29.0%
2020 54.1% 50.6% 45.1% 37.2% 31.1% 28.9%
2021 54.4% 52.2% 46.4% 37.4% 31.3% 29.1%
2021 55.1% 52.9% 46.9% 37.9% 31.4% 29.5%
2021 56.4% 54.3% 47.8% 38.6% 31.2% 30.1%
2021 58.3% 56.4% 48.7% 39.5% 31.1% 30.7%

Restoring affordability levels in these provinces means cutting housing costs by between a quarter and two-fifths.

If we stay on our current trajectory, there will be more housing supply — but not enough to address affordability

We’ve developed projections of the economy to 2030 if current trends continue. Our projections of income and demographics give us a picture of what housing demand will be in 2030.

The following graph shows the ratio between our projections of:

  • household numbers, and
  • housing supply

The following graphs clearly indicate that what is driving housing demand higher is a much greater increase in incomes than household numbers.

Income-per-household trends to 2030 across four largest provinces and Canada, indexed at 100 in 2019

Source: CMHC calculations

Text Version

Income-per-household trends to 2030 across four largest provinces and Canada, indexed at 100 in 2019
Year Alberta British Columbia Ontario Quebec Canada
2019 100 100 100 100 100
2020 94 101 102 102 101
2021 101 112 111 111 110
2022 112 121 115 117 116
2023 118 127 121 123 122
2024 123 132 126 128 127
2025 128 137 132 133 132
2026 133 142 137 138 137
2027 140 148 143 143 143
2028 146 154 149 148 149
2029 153 160 156 153 155
2030 160 167 162 159 161

Demographic and housing projections to 2030, indexed at 100 in 2019 (Canada)

Source: CMHC calculations based on Statistics Canada population projections

Text Version

Demographic and housing projections to 2030, indexed at 100 in 2019 (Canada)
Year Households Housing Stock Population Population aged 25 – 34
2019 100 100 100 100
2020 101 101 101 102
2021 103 102 102 102
2022 104 104 103 103
2023 105 105 105 105
2024 107 107 106 106
2025 109 108 107 107
2026 110 110 109 108
2027 112 112 110 108
2028 113 113 111 108
2029 115 115 113 108
2030 116 117 114 108

We can see that there will be more housing supply in 2030 — this is what we call the “business-as-usual” case. It’s not enough for housing affordability.

The following chart shows that the housing stock-to-population ratio is declining in Ontario if current trends persist. This is worrisome as this is where a large portion of Canada’s population reside. Much more housing supply is needed in Ontario.

Projections to 2030: Housing stock-to-population ratio

Source: CMHC calculations based on CMHC and Statistics Canada data

Text Version

Projections to 2030: Housing stock-to-population ratio
Year Alberta British Columbia Ontario Quebec Canada
2019 105 104 103 107 105
2020 104 104 103 107 105
2021 104 104 103 107 105
2022 104 105 103 108 105
2023 104 105 102 109 105
2024 104 106 102 110 105
2025 104 106 102 110 105
2026 104 107 101 111 105
2027 104 107 101 112 105
2028 104 108 101 112 105
2029 104 109 101 113 106
2030 104 109 101 114 106

The following table provides core results of the supply gap by province. The report has imposed different affordability targets by province to reflect their levels of income and history.

We anticipate that Canada will need an additional 3.5 million units to restore housing affordability.

  Target level of affordability in 2030 (in percentage) Housing supply required (in millions)
Ontario 37% 1.85 million
Quebec 32% 0.62 million
BC 44 % 0.57 million
Manitoba 30 % 0.26 million
Saskatchewan 30% 0.10 million
Newfoundland 30% 0.06 million
Nova Scotia 31% 0.05 million
Alberta 30% 0.02 million
New Brunswick 30%  
P.E.I. 30%  
Total   3.53 million

Two-thirds of the 3.5 million housing supply gap is located where housing markets are least affordable — Ontario and British Columbia

Most of the additional housing supply is required in Ontario, British Columbia and Quebec. More than half of which are required in Ontario.

We see the sharpest increases — two-thirds of the 3.5 million — are required in British Columbia and Ontario. It’s within these 2 provinces that housing markets are least affordable.

Historically affordable, Quebec’s housing market has faced significant declines in affordability over recent years.

Overall, the loss of affordability can be attributed to a housing supply not responding to demand in some of Canada’s large urban areas over the last 20 years.

Other provinces remain largely affordable for a household with the average level of disposable income. However, challenges remain for low-income households in accessing housing that is affordable across Canada.

It’s important to note that even if we do reach these targets, there would still be many low-income households that would face affordability challenges.

It’s time to create housing opportunities for everyone in Canada

Increased housing supply in the rental and homeownership market is critical to achieving affordability. This will help create opportunities for households to access housing that meets their needs.

More and diverse supply across the housing system enables households to better match with housing they want and can afford. This keeps households from stretching their budgets to bid for living spaces in limited supply and that are highly priced.

Not all new housing units need to be new construction as there are alternative approaches to increasing housing supply. For example, co-living and intergenerational families living together could increase.

Existing housing structures, industrial structures and retail spaces could also be redeveloped into multi-housing units.

Not all new housing units need to be new construction as there are alternative approaches to increasing housing supply.

There are big hurdles to overcome to meet the 2030 target

There are significant barriers to achieving this quantity of supply by 2030:

  • significant delays between when a project is proposed and when it starts due to long approval processes.
  • skill shortages and supply-chain challenges are pushing up costs and lengthening the time it takes to build, in the short term.
  • increase in supply will put pressure on the cost of construction.

Further analysis will be required to build out our understanding of these barriers.

It’s time to think differently — drastic change is required

The scale of the challenge identified in the report is more important than the exact number of housing units required.

Canada’s approach to housing supply needs to be rethought. It needs to be done differently. There must be a drastic transformation of the housing sector — including governments — and priority given to increasing the supply of housing to meet demand.

To solve the issue of housing affordability, we need an ‘all-hands-on-deck’ approach to increasing the supply of housing to meet demand.

Partnerships and innovation are needed within all parts of the housing system to achieve 2030 goals

The federal government can’t achieve this increase in housing supply on its own.

  • The National Housing Strategy is investing $72+ billion over 10 years to build stronger communities and more affordable housing through construction, research and innovation. The Strategy prioritizes those in greatest need, including seniors, Indigenous people, people experiencing or at risk of homelessness and women and children fleeing violence.
  • Building on these measures and recognizing that it is becoming increasingly challenging to find an affordable place to live, Budget 2022 announced a series of investments to build more houses, help people save for their first home, and curb speculation and unfair practices that drive up housing prices.
  • Putting Canada on the path to double housing construction over the next decade, the Housing Accelerator Fund aims to increase housing supply by a 100,000. This is a start, but we still face a big challenge.

Even with the current programs we have, there must be a drastic transformation of the housing sector, including government policies and processes. Canada’s approach to housing supply needs to be rethought and done differently.

To solve the issue of housing affordability, we need an ‘all-hands-on-deck’ approach to increasing the supply of housing to meet demand. For example:

  • Developers must become more productive and make full use of land holdings to build more housing while governments must make regulatory systems faster and more efficient.
  • Partnerships and innovation are needed in all parts of the housing system to increase housing supply. This is one of the first steps to take, but there’s so much more to be done.
  • All levels of government must come together to help build the supply of affordable housing and to help this initiative succeed.

Download the report

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Date Published: June 23, 2022