Canada is facing a housing gap that requires the construction of 3.2 million new homes within the next decade, according to the parliamentary budget officer. However, current construction rates are not sufficient to meet this target. The latest report from the PBO indicates that there will be a temporary increase in new home builds over the next three years before returning to normal levels.
The projection suggests an average of 227,000 new homes will be completed annually for the next ten years, but an additional 65,000 homes per year are needed to bridge the housing gap. The Parliamentary Budget Officer, Yves Giroux, highlighted the importance of addressing the pent-up demand that has accumulated over the years due to unmet housing needs.
Furthermore, a decline in the formation of new households is expected following a reduction in Canada’s immigration targets. Although this reduction may alleviate some pressure on housing demand, Giroux emphasized that the impact will not be sufficient, given the influx of immigrants in recent years.
Giroux also noted that suppressed demand has been prevalent due to certain segments of the population being priced out of the housing market. The vacancy rate dropped to 3.3 percent in 2024, significantly lower than the average of 6.4 percent recorded between 2000 and 2019. Low vacancy rates limit housing choices and may lead to higher rents or prices, forcing individuals to stay in inadequate housing.
The PBO anticipates the construction of approximately 2.5 million homes over the next decade, falling short of the necessary 3.2 million to close the housing gap. Despite recent federal pledges to double housing construction, the report does not incorporate these commitments. Giroux emphasized the importance of effective implementation of housing plans by the government at all levels to address the housing gap effectively.
