RBC Warns Housing Crisis Will Worsen Without Accelerated Construction
The housing crisis in Canada is set to worsen if construction does not increase to meet demand, as per a new RBC Economics report.
RBC assistant chief economist Robert Hogue stated that housing construction needs to rise by almost 50 percent to keep pace with future demographic growth.
In a recently released report, Mr. Hogue wrote, “Solving Canada’s housing crisis is a massive undertaking. It will require time and significant effort from governments, industry, communities, and other stakeholders to rectify the policy mistakes that led to skyrocketing house prices and rents.”
According to the report, if building continues at the current pace, yearly completions need to increase from an average of 218,000 to 320,000 by 2030 to meet future demand.
The RBC recommendation comes shortly after the Canada Mortgage and Housing Corporation predicted a decline in housing starts due to higher interest rates, estimating 224,485 housing starts in 2024.
While high-interest rates contribute to affordability issues, the report identified the construction industry’s capacity constraints as a significant factor in limiting new builds due to the unprecedented level of construction required in Canada.
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An aging workforce and challenges in attracting and retaining workers continue to impact the industry. Approximately one in five construction workers are nearing retirement age, leading to a need for 330,000 workers to be replaced over the next decade.
Mr. Hogue also proposed seven solutions in the report to address Canada’s housing needs, emphasizing the need to expand the construction labor force by streamlining immigration processes and prioritizing newcomers with construction skills.
Seven Solutions
“Multi-pronged action” is necessary to tackle Canada’s housing crisis, he noted, highlighting the importance of innovative designs, building techniques, and technology adoption to boost housing production efficiency.
Lowering the cost of new housing, promoting prefabricated housing, expediting project approvals, easing zoning regulations, and accelerating social housing construction were also suggested as strategies to ramp up home construction.
“Time is of the essence. More progress is crucial, and Canada must increase its housing stock significantly, particularly in the affordable rental and social housing sectors, to enhance Canadians’ quality of life,” Mr. Hogue concluded.
