The boom-and-bust cycles of housing construction in Canada

Houses for sale in Ottawa

Pace of housing construction has significantly declined over the years

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There was a time when Canada knew how to build homes fast and in large numbers. Not anymore.

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Many cities, including Ottawa, Quebec City, Toronto and Vancouver, more than or almost doubled their housing stock from 1961 to 1980, but the pace of housing construction has significantly declined over the years, even though population growth has remained steady or intensified.

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Last year, the Canadian population, thanks to immigration, increased by a million. The estimates for this year suggest an even higher population growth, which will put more pressure on affordability because the housing supply, despite the government’s push, is not meeting the targets set for growth.

Why Canada is finding it hard to build more housing fast is an essential consideration for those alarmed by the erosion of housing affordability. Despite acute housing shortages, building homes in or near large cities is increasingly challenging.

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Take the Greater Toronto Area. Attempts by the provincial government to build new housing on almost 3,000 hectares of 810,000 hectares of protected land in the outer suburbs face resistance from those concerned about preserving the environment, green space and agricultural land.

Those opposing development argue that plenty of space is available to construct more housing within already-built-up areas, which seems like a reasonable argument: Why not build and intensify where land has already been developed? That, though, is easier said than done.

Municipal politicians and urbanists rose against the Ontario government when it recently decided to double the size of a planned project in Mississauga, a suburb near Toronto, to 16,000 dwellings from 8,000. The local councillor termed the intensification “devastating” because the province did not consider the council’s “infrastructure concerns” and “vision.”

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Chart showing years in which housing was built in Canada

We’re in a new era of impossible urbanism, where building on greenfields or brownfields is equally impossible, and will only become more difficult as population and pricing pressures worsen.

Unlike European cities, the housing stock in Canadian cities is much younger. Of the 13 municipalities in Canada with a population base of at least 500,000, only Montreal, Hamilton and Winnipeg had 30-plus per cent of the 2021 housing stock built before 1961. By contrast, less than five per cent of the homes in Brampton, Ont., and Surrey, B.C., were built before 1961.

Furthermore, 50 per cent of the housing in populous municipalities has been built since 1981. It’s even newer in some cities: almost 60 per cent in Calgary and Edmonton, and 57 per cent in Vancouver.

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Canada’s post-Second World War housing construction boom provided the means to house a rapidly growing nation and the birth of a middle class that helped the economy grow. A combination of government policies and incentives — for example, the introduction of the Canada Mortgage and Housing Corp.’s loan insurance program in 1954 — and investments by the private sector helped to quickly deliver plenty of housing.

The demographic growth of suburbs accelerated as the middle class headed outwards in search of affordable and spacious housing.

Even in absolute numbers, more housing was built in populous cities in the 1960s and 1970s than in the past 20 years. The earlier housing construction boom happened before recent construction and information technology advances, and even with a much smaller skilled labour force, the 13 largest cities added 1.38 million homes between 1961 and 1980, compared to 1.35 million homes between 2001 and 2021 even though the population base was much higher.

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The rate of housing construction relative to population size has declined over the years, but new housing construction has grown more for multi-family dwellings, mostly high-rise condominiums and some apartments, and declined for single-dwelling buildings. These trends are likely to continue as developable land becomes scarce.

To facilitate growth in housing, Canada must find ways to defeat impossible urbanism that resists any new construction. Such resistance to development might address local interests, but it does not help improve the collective welfare of a growing nation.

Murtaza Haider is a professor of real estate management and director of the Urban Analytics Institute at Toronto Metropolitan University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website, www.hmbulletin.com.

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