Canada has to increase home building volumes by 50% in order to cope with immigration levels

The latest report by Desjardins Securities suggests that Canada needs to increase home building volumes by 50%, otherwise it will not keep up with the current and expected immigration levels.

This year, 210,000 housing starts are expected, but the report says almost 100,000 additional housing starts are necessary this year and in 2024, as Canada is ready to accept a record number of immigrants.

According to many experts, Canada is facing a severe lack of housing, and it will probably get even worse. The country has raised its immigration levels to offset the shortfall seen during the first year of the pandemic and to help fill jobs in construction, health care, and other segments.

As the federal government plans to accept 1.45 million new permanent residents during the next three years, housing starts must become a priority, the report says, at least because it takes time to finish the construction.

“We need to raise our volumes significantly,” – noted Randall Bartlett, Desjardins’ senior director of Canadian economics.

Many immigrants settle in Ontario and B.C., two provinces where real estate prices have been growing faster than anywhere else in Canada.

While the average national home price fell by 13% in December compared to its February peak, still in case of Toronto and Vancouver it exceeds $1 million.

“If newcomers keep following this tendency moving to Ontario and British Columbia, affordability will become even worse both in those regions and across the entire country,” – the report says.

Meanwhile, rental prices keep growing sharply as many potential homebuyers were forced to keep renting because of mortgage rates increases.

Desjardins’s demand for more home construction coincides with the statements from the Canada Mortgage and Housing Corp., which has been saying that Canada needs to increase its home supply several times already.

The government data shows that there were 261,849 housing starts reported in 2022. However, the number is expected to go down, as many developers decided to postpone their project launches when the costs of borrowing and construction sky-rocketed.