Canada’s Immigration Fuels Housing Crisis: New Report Urges Building Boom

Read the original article from Toronto Star: ‘We have to wake up here’ Canada must build record number of new homes to keep pace with immigration, report finds

Report calls for record number of new homes in Canada

According to a report released by Desjardins Securities on Monday February 13th, Canada must build a record number of new homes to keep up with the pace of immigration. New home building needs to increase by at least 50 per cent through 2024, or around 100,000 more housing starts on average annually in 2023 and next year. This would lead to the highest level of housing starts in history. The country is set to break ground on around 210,000 housing units this year.

Demand for housing in Canada

“There will be more demand for housing in Canada,” said Randall Bartlett, senior director of Canadian economics at Desjardins. “And if we respond how we have done historically, we won’t be able to meet that demand.” The federal government has set a target of admitting 465,000 new immigrants in 2023 and plans to bring in 1.45 million in the next three years.

Incentives for municipalities to build

To boost supply, the federal government must put greater incentives in place for municipalities to build. Canada has some of the least dense cities in the world. Randall Bartlett said, “We really need to focus on density and building within cities. The model of urban sprawl and building on suburbs has been an issue because we run into major infrastructure trouble due to the long commutes people have to take.” The federal government can expedite the process to build on federal lands. The same can be said for provincial land, but it can’t come at the expense of the environment.

Innovation in building

The federal government should focus more on innovation to accelerate the way we build, said Benjamin Tal, CIBC Capital Markets deputy chief economist. “The government needs to fund and invest in startups that use 3D printing and use different building materials. We are building the way we did 50 years ago. There needs to be innovation.”

Removing government red tape

Removal of government red tape is a top priority to address housing shortages and treat it as an emergency, Tal said. “We have to wake up here, this is a major crisis.”

Affordable rental housing

The report doesn’t address the fact that most newcomers initially rent, which impacts what type of housing gets built. Ricardo Tranjan, senior researcher at the Canadian Centre for Policy Alternatives said, “Creating affordable rentals that are purpose-built is central when building more housing.” In Toronto, condo rents increased by 17 per cent in 2022 and the number of condos renting for less than $2,000 a month has dropped by 87 per cent in the last three years.

Government investment

In the 1960s and 1970s, the federal government funded a large supply of rental housing and provincial governments took advantage of the funding to build more affordable and social housing, Tranjan said. “That’s the magnitude of investment and level of resolve we need from the federal and provincial government,” he said.

Densifying cities

“If we don’t densify cities and prices continue to go up because our policymakers are unwilling to increase density, we could find ourselves in a place where Canadians continue to be priced out,” said Bartlett.

Conclusion

The report by Desjardins Securities suggests that Canada needs to build a significant number of new homes to keep up with the pace of immigration, which is expected to increase in the next three years. The federal government needs to provide greater incentives to municipalities to build, increase density, and build within cities to reduce infrastructure issues from long commutes. The report recommends that the government focus more on innovation and invest in startups that use 3D printing and different building materials to accelerate the way we build. Creating affordable rentals that are purpose-built is central to building more housing. The government should invest in affordable and social housing to the magnitude it did in the 1960s and 1970s. Without densifying cities and increasing density, Canadians could continue to be priced out.

** Source: Toronto Star **