Ottawa Turns to Canada Post Land in Federal Budget to Develop Housing Supply

The federal government is looking at utilizing unused properties owned by Canada Post and National Defence to address the affordability and supply issues in the housing market.

Announced in the federal budget released on April 16, the government plans to release lands owned by both entities to construct housing at a rapid pace and scale not seen in decades, aiming to help young Canadians enter the real estate market.

The target is to create a supply of 3.87 million new homes by 2031, adding two million net new homes to the existing 1.87 million homes set to be built.

The Canadian Mortgage and Housing Corp. has stated that the country needs 3.5 million more homes by 2030 to restore affordability to levels seen in 2003 and 2004.

To bridge the gap between housing supply and demand, the Parliamentary Budget Officer mentioned that the country needs to construct an additional 181,000 units on average each year until 2030, resulting in 3.1 million net housing units.

To reach the target of 3.87 million homes, the plan introduces new initiatives to acquire more land for development, supplementing previously announced measures like 30-year amortization periods for first-time buyers, restrictions on foreign investors, regulations on short-term rentals, and a $400 million increase to a fast-tracked construction fund worth $4 billion.

One of the main aspects of the plan is to unlock vacant public land and lease it to developers to construct homes that will be affordable in the long term.

A portion of this land will come from Canada Post, which holds a portfolio of 1,700 post offices nationwide.

The government is evaluating six Canada Post properties, with three in Quebec, two in B.C., and one in Alberta, for their housing development potential, and has identified another 33 areas where Canada Post’s land could be utilized for construction.

National Defence’s 622 properties are also part of the plan, with sites in Halifax, Toronto, and Vancouver earmarked for civilian or military use, and another 14 sites deemed surplus and suitable for housing. (An allocation of $6.9 million over the next four years has been set aside to build 1,400 new homes for military members and renovate 2,500 existing units.)

To facilitate the utilization of public land, the budget suggests investing $5 million over three years to revamp the Canada Lands Co., the Crown corporation managing federal properties.

The envisioned overhaul by the Liberals aims to enable the transfer of land from the federal government to Canada Lands for $1 wherever possible, cut approval times by half, bundle multiple properties for joint transfer, and offer long-term low-cost leases for housing providers.

The government believes that releasing more land for development will help lower housing costs for average Canadians, with the goal of limiting shelter expenses to no more than 30% of their income.

Ratehub.ca estimated on April 16 that the minimum annual income required to purchase an average home in major Canadian cities was as high as $1.1 million in Toronto and Vancouver in March, when CREA reported an average home price of $698,530.

This figure is projected to rise by 4.9% annually to $710,468, more than double the initial forecast made by the national housing group at the beginning of 2024.

The budget notes that many first-time homebuyers are finding it increasingly challenging to afford homes while renters are struggling to keep up with rising costs. The average rent increased by 8.2% year-over-year in February, the fastest pace since the early 1980s.

To address this issue, the government aims to encourage the construction of more rental housing for middle-income Canadians through the introduction of Canada Builds.

This initiative involves partnering with provinces and territories to leverage $55 billion from the existing Apartment Construction Loan Program, which provides repayable, low-interest loans to developers and municipalities.

To access federal funding under this program, provinces and territories must demonstrate their commitment to building on government, non-profit, and vacant land, reducing development approval times, and considering access to child care in the development process.

Canada Builds is modeled after a similar successful program in British Columbia.