Canada needs 3.1 million new homes by 2030 to close 'housing gap,' budget watchdog warns

The parliamentary budget officer (PBO) has warned Canada needs to build 3.1 million more homes by 2030 if the country’s “housing gap” is to be closed.

Yves Giroux’s report, which does not incorporate recently announced measures, said 460,000 new households were formed in 2023, “well in excess” of the 242,000 houses built.

It also said that, if housing was affordable, there would have been 631,000 households formed back in 2021. That phenomenon was referred to as “suppressed household formation.”

Demand for homes dragged the nation’s vacancy rate down to a record low of 5.1 per cent last year, the report added.

Canada’s population surged by 1.27 million in 2023, the vast majority (97.6 per cent) of the new additions being migrants.

Prime Minister Justin Trudeau has blamed the “massive spike” in migrant numbers for bringing down wages and putting pressure on communities across Canada.

Trudeau’s analysis concurred with economists at the National Bank of Canada, who said earlier this year that “extreme” population growth was holding back living standards and causing house prices to balloon.

“Combined with our baseline outlook for completions, closing Canada’s housing gap would result in 3.1 million net housing units completed by 2030, which translates into 436,000 units completed annually, on average, over 2024 to 2030,” Giroux said in the report.

“This pace of housing completion would represent an increase of 80 per cent above the record level of completions in 2023, sustained for seven years.”

The PBO also explained, however, that even this huge program of building “would not likely be sufficient to fully address affordability concerns” across Canada.

“Other factors, such as household income, interest rates and regional disparities would also need to be considered,” the PBO said, pointing to an estimate from the Canada Mortgage and Housing Corporation (CMHC) that the housing supply gap is actually much larger.

“Combining baseline projections and housing gap estimates, CMHC analysis indicates that 5.1 million units will be needed over 2023 to 2030—well above PBO’s estimate of 3.1 million units over 2024 to 2030,” it said.