Housing Affordability | We need to double the number of housing starts each year

Quebec needs 620,000 additional housing units by 2030 to return to desirable levels of affordability. To do that, we need to double the pace of housing starts, not slow it down.

Posted at 11:05 am

Andre Dubuc

Andre Dubuc
The press

In absolute terms, Quebec’s housing stock is expected to exceed 5 million homes in 2030, or 5.19 million to be precise, according to a study released Friday morning by the Canada Mortgage and Housing Corporation (CMHC).

This target represents an increase of 620,000 homes over those that would already be built at the current construction rate, an increase of 14%. Without these additional homes, the housing stock in 2030 is expected to be 4.57 million.

The federal authority understands affordability as the ratio of the average housing costs to the average income in a certain state.

“We fully support the CMHC’s conclusions,” said Paul Cardinal, director of the economics division of the Association of Construction and Housing Professionals of Quebec. Mr. Cardinal estimated that December 2021 was short of 100,000 housing units to rebalance supply and demand in Quebec’s housing market.

Doubling the pace of annual housing starts is a major challenge, CMHC recognizes in its study. “If the construction sector can improve its productivity and if the regulatory process is faster and less uncertain, it is possible to take concrete measures to increase the housing supply,” it says.

With an increased supply of 620,000 units, the home price would adjust so that the target affordability level is 32% of average household income in 2030, according to the CMHC. The nominal average price would thus be $364,000 in 2030. This price rose to $449,000 in 2021.

The negative gap between the average price in 2030 and 2021 does not mean that house prices will collapse. It must be understood that the new inventory will have different characteristics than existing dwellings, such as smaller dwellings, more collective dwellings and fewer single-family dwellings, a smaller floor area, etc.

Nationwide, CMHC predicts that another 3.5 million homes will need to be built by 2030 to make housing affordable again. Efforts are focused on Ontario and British Columbia, where two-thirds of the additional housing needed would be concentrated.

“Creating additional units on the market will allow households to select one that truly suits their needs,” explains CMHC in its report. This will leave units vacant, promoting long-term affordability. This cascading effect improves affordability over time. »

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