CMHC: Supply is the Biggest Issue Affecting Housing Affordability

One of the most predominant issues that impacts housing affordability is the shortage of housing supply, according to Canada Mortgage and Housing Corporation (CMHC). On Tuesday, the Housing Supply Report was released, and, in that report, the key finding was the supply of houses affecting housing affordability.

“The biggest issue affecting housing affordability in Canada is that supply simply isn’t keeping pace with demand,” the report noted. CMHC said this is the first report in a series that will be released throughout 2022 and 2023 to “inform better policies and decision making” with regards to housing supply. The report also highlighted, “Housing starts have struggled to keep up with population growth in some CMAs, especially Toronto”.

Nevertheless, there were signs in 2021 that indicated a change prominently with residential construction expanding in the country’s six largest census metropolitan areas compared to 2020. Some of the highlights are as follows:

• Although not relative to the population, Toronto started the most housing units in 2021, increasing by 9% from 2020. Apartments and single-detached homes were the major home types that were being constructed throughout the region.
• Calgary noted the strongest expansion in housing starts and an increase of 63% was noted from 2020. Although it is essential to highlight that part of this increase was due to the fact that construction of new homes began in 2020, during the pandemic.
• Vancouver was the only centre to see single-detached construction decline, down 2.3% from 2020. This is an ongoing trend that was noted during the past decade because of the high land prices rendering new single-detached development largely uneconomical.
• Montreal set its highest pace of apartment construction starts in over three decades, responding to both rising rents and demands.

Figure 1 Source: CMHC

Predominant Housing Type Under Construction Varies by Region

It is essential to highlight that the type of houses being constructed is entirely dependent on the area in question. For example, Ottawa has the greatest diversity of housing, this enables builders to construct housing of all types such as single-detached, apartments and row houses. Regarding single-detached homes, they are most popular in Calgary, Edmonton and Ottawa due to the fact that these areas have the highest availability for development land, according to CMHC.

On the other hand, in Vancouver and Montreal, one in ten new housing projects were related to the construction of single-detached homes. Furthermore, the construction of apartments is the predominant type of housing in such cities, including Toronto as well. CMHC said, “This was due to a need to intensify the use of the more limited land available (due to both regulatory and geographic constraints),”. “Toronto prevails in construction of high-rise apartment buildings with hundreds of units, including those for rent or purchase,” CMHC added.