Canada Needs to Double Home Construction to Restore Affordability by 2035, Says CMHC

CMHC: 4.8 Million New Homes Needed to Close Canada’s Affordability Gap

In a newly released report, the Canada Mortgage and Housing Corporation (CMHC) says that Canada must double its current pace of housing construction to restore affordability levels last seen in 2019. That means building between 430,000 and 480,000 homes per year– both in the ownership and rental markets- by 2035.

Under current conditions, CMHC projects Canada will average only 245,000 housing starts per year, a shortfall that would leave many Canadians priced out of the market for another decade.

What It Means for Canada’s Housing Market

CMHC’s latest Supply Gaps Estimate Report outlines the scale of construction needed to close the affordability gap across Canada. It emphasizes that reaching this goal will require:

A significantly larger and modernized construction workforce
Increased private investment
Reduced red tape and development delays
Greater innovation in construction technologies
Growth in labour productivity

“As we increase housing over time, house price growth will come down,” said CMHC deputy chief economist Aled ab Iorwerth during a press call.

He noted that while the transition will be gradual, building more homes is essential to reduce upward pressure on prices and restore balance to Canada’s real estate market.

Why 2019 Is the New Benchmark for Housing Affordability

CMHC defines affordability as housing costs not exceeding 30% of a household’s gross income. In 2019, that benchmark sat at 40.3%. But under the current trajectory, housing costs could reach 52.7% of income by 2035.

If Canada successfully doubles housing starts, CMHC projects that figure could be brought back down to 41.1%, a level much closer to the 2019 benchmark.

The report describes 2019 as a “pre-shock” baseline before the pandemic-era housing surge triggered rapid structural changes in the market.

Regional Housing Supply Gaps: Where It’s Worst

CMHC highlighted the provinces and cities with the largest housing supply gaps:

🔹 Ontario

Significant shortfall in both rental and ownership housing
Toronto requires a 70% increase in homebuilding to match local income levels

🔹 British Columbia

Vancouver needs 7,200 additional homes per year above current projections (a 29% increase)

🔹 Nova Scotia

Major gap driven by rising ownership costs in Halifax and surrounding regions

🔹 Quebec

Montreal has the largest housing gap of any Canadian city, according to CMHC

🔹 Alberta

Calgary will need 45% more housing starts annually
Edmonton is on track, with no additional supply needed

Federal Commitments: Will the Build Canada Homes Plan Help?

During the last federal election, the Liberal government promised to double the pace of residential construction to 500,000 homes per year. This includes:

Establishing Build Canada Homes, a new national housing entity
Providing $25 billion in debt financing and $1 billion in equity funding to prefabricated homebuilders
Reducing build times by up to 50% using factory-built housing

CMHC noted that if these goals are met, house prices in 2035 could be roughly 25% lower than if nothing changes. Average rents could also be 5% lower, easing affordability for tenants nationwide.

Final Thoughts

Canada’s housing affordability crisis won’t fix itself. According to CMHC, massive construction investment, reduced barriers, and long-term innovation are critical to closing the affordability gap.

“We’ve seen fundamental changes in the housing system since 2019,” said ab Iorwerth.
“That’s why we’ve decided to use 2019 as the benchmark—and that’s where we need to get back to.”

📊 Key Takeaways:

430,000–480,000 homes/year must be built to restore affordability
Doubling current housing starts is the only way to meet demand
2019 is now the target year for affordability benchmarks
Ontario, B.C., and Nova Scotia face the steepest supply gaps
Montreal has the largest city-level deficit
Federal programs like Build Canada Homes aim to fast-track solutions

📚 References:

Canadian home sales rise, prices flat in May on a monthly basis | Reuters

Canada Housing Market