CMHC: Supply is the “Biggest Issue Affecting Housing Affordability”
A shortage of housing supply has been the predominant issue impacting housing affordability, according to the Canada Mortgage and Housing Corporation (CMHC).
That was the key finding in the national housing agency’s inaugural Housing Supply Report released on Tuesday.
“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.
“Housing starts have struggled to keep up with population growth in some CMAs, especially Toronto,” the report added.
However, there are signs that started to change in 2021, with residential construction expanding in the country’s six largest census metropolitan areas compared to 2020.
“Rising prices, declining inventories and strong housing demand sustained by low interest rates provided confidence to developers and homebuilders to move ahead with new projects,” it noted.
Here are some of the highlights for select metro areas:
Toronto started the most housing units in 2021 (though, not relative to population), rising 9% over 2020. This was fuelled by new construction of apartments and single-detached construction.
Calgary had the strongest expansion in housing starts, which were up 63% from 2020. Part of this increase, however, is due to slower construction during the pandemic in 2020, CMHC noted.
Vancouver was the only centre to see single-detached construction decline, which was down 2.3% from 2020. This is an ongoing trend that developed over the past decade due to high land prices rendering new single-detached development largely uneconomical,” CMHC noted.
Montreal set its highest pace of apartment construction starts in over three decades, responding to both rising rents and demand.
Predominant housing type under construction varies by region
The breakdown of housing types being built really depends on the metro area in question.
Ottawa, for example, has the greatest diversity of housing types, with an equal share of single-detached, apartments and row houses being built.
Single-detached housing construction is most common in Calgary, Edmonton and Ottawa, cities that generally have a higher availability of developable land, CMHC notes.
In Vancouver and Montreal, just one in 10 new housing starts were single-detached homes. Instead, apartments are the predominant housing type being constructed in these cities, along with Toronto.
“This was due to a need to intensify the use of the more limited land available (due to both regulatory and geographic constraints),” CMHC said.
“Toronto prevails in the construction of high-rise apartment buildings with hundreds of units,” including those for rent or purchase, CMHC added.
Looking forward, CMHC says work is underway to estimate the number of housing units that will be needed across the country to improve home affordability.