According to a September 2023 report by Canada Mortgage and Housing Corporation, Canada needs an additional 5.8 million affordable housing units between 2021 and 2030. In a June 2022 assessment, the agency noted that Canada was on track to build only about 2.3 million new housing units by 2030.
Additionally, the CHBA housing index found that 64 per cent of builders surveyed built fewer homes in 2023 because of the high interest rate environment and 36 per cent expected to have fewer starts in 2024.
“To turn this trend around and work towards doubling housing starts, we need a robust whole-systems approach by all levels of government, local, provincial and federal,” said CHBA CEO Kevin Lee, noting that changes were required in the areas of financing, labour, policy and productivity to address key issues.
Lee noted that tight financial conditions, including high interest rates and overly restrictive mortgage rules, were locking well-qualified buyers out of the market, which was resulting in fewer homes being built.
In its report titled, “Sector Transition Strategy,” the CHBA recommended that the government introduce 30-year amortization periods for insured mortgages for new construction. Lee noted that this would enable well-qualified buyers currently locked out of the market to become homeowners without creating undue demand, since only new homes would be eligible for the longer amortization periods, which would incentivize more housing supply.
The CHBA also called on the government to ensure its own policies including interest rate and mortgage rules, taxation, codes and standards do not run counter to increasing supply.
Lee noted that rising home building and carrying costs were rising and adding to the cost of homes.
According to the CHBA report, development taxes including development fees, lot levies and amenity fees have risen by about 700 per cent over the past two decades and can now be as high as 25 per cent of the sale price.
The CHBA also highlighted that the housing sector was facing a labour shortage with 22 per cent of the residential construction workforce set to retire over the coming decade, according to data by BuildForce Canada.
“This means that promoting careers in residential construction domestically and restructuring the immigration system to allow those who dream of building homes to immigrate to Canada is critical to fill the industry's labour gap,” Lee said.
The CHBA noted in its report that increasing productivity was essential to address the housing shortage in the country and that a shift to more factory-built construction was necessary.
Lee noted that somewhere between 25-30 per cent of current constructions used some form of factory-built construction but that only two per cent were full modular constructions.
The CHBA noted that factory built construction requires high capital investment, high overhead, a steady workforce, and steady throughput and recommended that the government inform and incentivize a transition to factory-built construction through targeted programming.
“This could involve grant funding for soft costs for site builders to transition to factory-built systems and for soft cost acceleration funding for manufacturing facilities to increase capacity and productivity,” Lee said.
Lee noted that business in the sector are currently structured to deal with the boom and bust cycle and that a transition to more factory-built systems would require government support to substantiate the business case and de-risk the investments.
The CHBA also recommended that the government offer strategic financing, including by providing low-cost financing repayable on a unit production basis rather than a time basis which would de-risk investments in case of an economic slowdown.
The CHBA report further recommended the introduction of a housing manufacturing tax credit equal to 30 per cent of the cost of investments in the new machinery and equipment used to manufacture housing.
“Investing in the future of housing construction capacity now will help prepare us for generations to come while addressing our immediate crisis,” Lee said.
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