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)
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
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)
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
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.

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Date Published: June 23, 2022

Canada’s Housing Supply Shortage: Restoring affordability by 2030

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

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

Affordability has changed over time and not for the better

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)

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

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

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

Projections to 2030: Housing stock-to-population ratio

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

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

There are big hurdles to overcome to meet the 2030 target

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

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

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

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

Affordability has changed over time and not for the better

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)

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

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

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

Projections to 2030: Housing stock-to-population ratio

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

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

There are big hurdles to overcome to meet the 2030 target

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

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

Was this page relevant to your needs?

How Can We Help?

How Can We Help?

Suggest an Improvement

How Can We Help?

Report a Bug

How Can We Help?

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