Housing starts should increase 50 per cent: study
March 14, 2023
Canada must increase housing starts by almost 50 per cent to keep fundamental demand from racing ahead of supply given the country's immigration targets, according Desjardins' recent Economic Viewpoint report.
Desjardins noted that the dramatic increase in immigration, if past trends continue, will have the greatest effect on Ontario, which has attracted about 45 per cent of all recent newcomers.
No matter where immigrants settle, the home-price impact of higher levels of immigration can be offset by an increase in the stock of housing, the study states.
“We estimate that housing starts would have to increase immediately by almost 50 per cent nationally relative to our baseline scenario and stay there through 2024 to offset the price gains from the increase in federal immigration.”
This equals about 100,000 more housing starts on average annually in 2023 and 2024,and would lead to the highest level of housing starts in Canadian history.
It would be required, in part, due to the lag between when new home construction begins and when those homes are listed for sale.
This increase is much more ambitious than the federal government’s 2022 budget targets. While it falls short of the plans laid out by the Government of Ontario in Bill 23, the More Homes Built Faster Act, the bill makes room to catch up in later years. Indeed, if housing starts were to reach 150,000 annually in Ontario in 2023 and 2024, which is not likely, this would have an offsetting impact on the average home price in Canada, according to Desjardins’ research