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Uzelman: Governments are building housing, past affordability is unattainable

A column by Bruce Uzelman
Photo by Marcus Lenk/

Federal and provincial governments were slow to develop and implement suitable policy responses to the housing crisis. Over the course of 2023, they have finally begun to do so. Yet, today’s mismatch in the supply and demand of housing has been evident at least since the middle of the last decade. Signs of the developing supply gap appeared long before that in the data. It seems no one chose to see them.

Annual population growth has increasingly outpaced annual housing completions. The Fraser Institute in October published “Canada’s Growing Housing Gap.” Their data shows that in the 1970s population never grew by more than 1.5 for every house completed the previous year, while in following decades, it regularly did. From 2016 onward population growth routinely exceeded two for every home completed, the only exception being 2020, and in 2022 the figure surged to 4.7, when nominal population growth surpassed 1 million.

CMHC, in a September report, writes that Canada will build 1.5 million homes by 2030 at current rates of construction. But, it adds, the country needs to build an additional 3.5 million homes in that time to restore housing affordability, last achieved in 2003-2004. The stimulus needed to correct a supply gap of that magnitude is far beyond the capacity of any one level of government.

CMHC Chair Derek Ballantyne noted that housing affordability, “requires close collaboration among all orders of government, and with the private and non-profit sectors.”

The CMHC report advises: First, about 60% of the housing supply gap is in the provinces of Ontario and BC. Both have seen large drops in affordability, and additional supply will be necessary. Second, more supply will also be required in Quebec where affordability has worsened, and in Alberta where economic growth has been strong. Third, other provinces are affordable for those with average disposable income.

Governments are finally pulling the correct levers to effect change. Two of the federal government’s key housing programs are the GST rebate for purpose-built rental construction, and the Housing Accelerator Fund with a budget of $4 billion and an objective to build 100,000 homes. The federal government has signed a number of accelerator agreements with municipal governments since September.

In return for the municipalities increasing residential density, the accelerator provides funding for housing. It encourages eliminating low density zoning and positioning high density zoning in city centers and transit corridors, and urges reforms to quicken development approvals, amongst other measures.

The provinces of British Columbia and Ontario have most actively incentivized construction. Both are pursuing goals similar to those of the Housing Accelerator. In addition, both are setting housing construction targets with associated incentives for municipal governments. In B.C., ten cities were assigned targets representing a 38% increase in homes built. Ten more cities are expected to be added later this year. In Budget 2023, B.C. added another $4.2 billion over three years to housing programs.

Federal programs announced will add perhaps 500,000 homes, according to Craig Alexander, former chief economist of TD Bank. He convincingly rejects Canada’s ability to eliminate the entire supply gap.

“There is no way Canada will ever close the 3.5 million housing gap that CMHC has identified,” Alexander writes in the Globe and Mail. “We are never going back to the affordability of the early 2000s assumed in the CMHC analysis. There is no way home construction will surge by 200 per cent, nor will Canada attract the roughly million construction workers required for the goal.”

Housing experts and activists are calling for governments to do more. But the federal government is tapped out. Excessive spending over the last eight years have put its finances in a precarious position. The public service has swelled, program spending has escalated and debt service costs have spiked. The government’s credit rating is at risk. Further significant spending would be reckless. Housing measures were added in the Fall Economic Statement, but were necessarily modest and won’t be instituted until 2025-2026.

Similarly, the provinces are experiencing financial constraints. B.C. has already committed billions of dollars to housing, as has Ontario, and both are already running significant deficits.

Restraint, it appears, is being forced on Ottawa, and perhaps on Victoria and Toronto, too. The housing shortage and affordability issues can and will be eased, but Alexander is almost surely correct. The affordability we enjoyed two decades back has forever disappeared.


Bruce W Uzelman, based in Kelowna, holds interests in economics and political science.

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