Canada will need to build 1.3 million additional homes by 2030 if it intends to close the nation’s housing gap, according to a new report from parliamentary budget officer Yves Giroux.
The PBO’S report titled Household Formation and the Housing Stock published on Thursday looks at how many additional homes Canada still needs to build to bring Canada’s vacancy rate back to the historical average.
“At the national level, we define the housing gap as the number of additional units that would be required to return the total vacancy rate to its long-term average by 2030, accounting for suppressed household formation,” reads the report.
“Estimates suggest that household formation surged above pre-pandemic levels, reaching 460,000 (net) new households in 2023—well in excess of record net housing completions of 242,000 units.”
Given the current pace of houses built since the pandemic, the PBO estimates that Canada must begin building 181,000 more homes annually than it currently constructs.
However, the Canadian Mortgage and Housing Corp. estimates a significantly higher figure to close the gap at 3.5 million more homes built by 2030 if Canadians would like to see housing affordability return to 2003-04 levels.
Giroux acknowledged the major difference in estimates between the CMHC report and his own by saying that his report was projecting solely from the perspective of closing the gap between supply and demand, without factoring in affordability.
Housing affordability is still a major factor at the moment, however, with Canadians currently facing some of the lowest levels of affordability on record.
According to a recent report from RBC, the average household in Vancouver has to spend 106.3% of its income to cover home ownership costs.
Other cities, such as Victoria and Toronto, saw similar deterioration, with households having to allot 80.2% and 84.8% of their incomes towards mortgages, respectively.
Housing affordability in Ottawa, Montreal, and Halifax is at or near all-time worst levels. Ottawa’s aggregate measure reached an all-time high of 49.9%. Montreal also reached a record-high needed income for housing costs, at 53.3%. Halifax, whose average aggregate measure was 31.9%, jumped to 45.3% of income required to spend on housing costs.