Canada's housing policy is failing citizens and newcomers alike

Andrew

Jun 30

Need also to question the demand side of the equation, which includes high levels of permanent and temporary residents:

Canada recently reached a milestone of 40 million people after growing by more than one million people in one year for the first time in 2022. But while we're adding people at record levels, the same can't be said about homes.

According to recent research, while the number of people Canada-wide has accelerated in recent years, the number of housing units completed has stagnated and even fallen to levels well below previous peaks. Specifically, from 1971 to 1980, Canada's population grew by 283,737 people annually on average while an annual average of 226,524 housing units were completed.

By comparison, from 2013 to 2022, Canada's population grew by 427,439 people annually on average yet only 196,872 housing units were completed annually on average. Put differently, during the 1970s, roughly four housing units were constructed for every five new people in Canada, compared to slightly less than one housing unit constructed for every two new people in recent times.

In short, fewer homes are being built for a larger, faster-growing population.

These dual trends spell trouble for many Canadians, especially those already struggling to find affordable housing. The severe imbalance between the number of homes available and the number required have squeezed many renters and would-be homebuyers who increasingly find themselves bidding for a dwindling supply of available units.

The result? Higher rents and home prices, and not just among the "usual suspect" communities in the greater Toronto and Vancouver areas, but in small- and medium-sized cities across the country. Last year, communities including London, Ont., Waterloo Region, Peterborough, Ont., Hamilton, Ont., Kingston, Gatineau, Quebec City and Halifax all saw their rental vacancy rates (a measure of rental unit availability) fall below 2 per cent, which places them in the same league as Toronto, Vancouver and Victoria. And when vacancy rates fall, rents rise.

Canada's shortage of housing has negative consequences for almost everyone, from the most vulnerable individuals and families to employers struggling to find workers. It also hurts newcomers to Canada – the single largest group contributing to Canada's population growth. Most new arrivals to Canada rent their homes, leaving them especially exposed to rapidly tightening rental markets. Rising rents and worsening availability hamper their prospects – and indeed the prospects of all renters or would-be homeowners – of achieving upward mobility, arguably one of Canada's main draws.

Thankfully, solutions are available, although policymakers must act big and act fast. There's tremendous opportunity to open up more neighbourhoods to help achieve the levels of homebuilding required to adequately house a growing Canada. Several cities have already started implementing policies making it easier to add housing units. For example, Edmonton is overhauling its zoning bylaws to allow more housing options citywide, including duplexes, secondary suites and small apartments in current low-density residential areas. Similarly, Toronto City Council recently adopted plans to allow up to four units per lot citywide without the need to rezone. And elsewhere in Ontario, British Columbia and Nova Scotia, provincial and local governments are making similar changes.

However, such policies are only the first of many necessary steps, and their effects will only be felt over the longer term so there's no time to waste.

As Canadians and policymakers ponder our 40 million demographic milestone, they should give honest consideration to Canada's worsening housing situation. In the right circumstances, a growing population can bring numerous benefits – economic, cultural and more. By not allowing homebuilding to keep up with population growth, however, governments across the country have hampered prosperity for both existing Canadians and newcomers. Governments, especially municipalities, must change the way they plan for and approve the millions more homes we need today and in the future if we're to restore the promise of a thriving Canada with upward mobility.

Josef Filipowicz and Steve Lafleur are senior fellows at the Fraser Institute.