A series of apartment buildings in Ottawa on May 16, 2022.Spencer Colby/The Globe and Mail
Canada’s housing affordability crisis will hit even more alarming levels in the coming years without a bold set of policy reforms to boost supply, the economics department at Royal Bank of Canada said Monday in a report.
The country needs to complete roughly 320,000 housing units annually from now until 2030, simply to meet the new demand that will arise over that period, according to RBC estimates. This would amount to an increase of nearly 50 per cent from recent completion levels – and it would require a record pace of construction.
If anything, Canada is moving in the wrong direction. There were around 240,000 housing unit starts in 2023, down from roughly 271,000 in 2021, according to figures from Canada Mortgage and Housing Corp. This doesn’t bode well for completions over the rest of the decade.
The RBC report outlines dozens of potential ways to mitigate the housing shortage – everything from speeding up project approvals to encouraging more people to enter the skilled trades. In some cases, governments are already moving to implement the solutions that are mentioned.
However, the RBC report says more action is needed and soon, especially when it comes to bulking up the stock of affordable units through rentals and social housing.
“It is imperative for Canada to find solutions and very quickly, because the pressures are there already,” said RBC assistant chief economist Robert Hogue, who wrote the report. “Time is of the essence.”
Once relegated to a handful of pricey cities, the housing crisis has boiled over in recent years and spread throughout Canada. The national benchmark home price is about $720,000 – less than in early 2022, but still around $200,000 higher than at the outset of 2020, according to figures from the Canadian Real Estate Association.
The rental market is also stressed. Vacancy rates have fallen to record lows, and with so much demand for units, rents have risen sharply in most places.
The situation has become a major political headache for various parties, but especially the federal Liberals, who have been languishing in polls for months.
Ahead of the April 16 budget, Ottawa has announced a spate of housing policy proposals, such as a $1.5-billion fund to acquire rental units and ensure they remain affordable. Last Tuesday, the government said it will add $400-million to its $4-billion Housing Accelerator Fund, which provides funding to municipalities that agree to certain conditions, such as loosening zoning rules.
And last September, the federal government removed the GST from new rental construction, a move that was matched by some provinces through the suspension of their own sales taxes.
“There’s a recognition, by all levels of government, that efforts should be deployed to really unlock the supply side and grow our housing stock,” Mr. Hogue said.
Despite those plans, the RBC report said the construction industry is bumping up against capacity pressures and that prices for building materials have soared over the past few years, which could hinder the affordability push. For example, one-fifth of construction workers have reached retirement age or will hit that point in the next decade.
The report said that home-building skills should be prioritized in the immigration system, perhaps by awarding more points to candidates with needed qualifications, while “ambitious targets” should be set for trade school enrolments.
“We’d like to see some very aggressive measures on skilled trades in immigration,” Mr. Hogue said.
Governments should incentivize developers to use prefabricated components that are built off-site, which could speed up completion times for projects, the RBC report said. It noted that restrictions should be eased on the use of cost-effective materials, such as mass timber, and that development charges could be reduced or deferred for purpose-built rental construction. Such charges could be waived for affordable housing projects.
On the demand side, the federal government recently said it will set targets to restrict the number of temporary residents, who have contributed to the strongest population growth that Canada has seen in decades.
While recent growth was “not sustainable” and will moderate in the years ahead, Mr. Hogue said demand for housing will continue to climb. He projects there will be an additional 1.9 million households formed by 2030.
Last week, a separate RBC report said it was the “toughest time ever” to afford a home in Canada, based on ownership costs as a proportion of median household income.
The Bank of Canada is widely expected to lower interest rates around the middle of the year, which should ease some affordability pressures. However, “it won’t be enough to make a meaningful difference,” Monday’s report said.
The housing crisis is having wide-ranging effects on the economy. For instance, Mr. Hogue noted that some employers in Vancouver are having trouble recruiting workers to the area because of high housing prices.
“The crisis now affects middle-income Canadians and extends beyond major cities,” the report said. “It strikes at the core of the Canadian dream of owning a home and is creating intense inter-generational tensions.”
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
