The scale of Canada’s housing affordability problem is too big for governments to solve alone, according to a new report released Monday by the Canada Mortgage and Housing Corporation.
“The scale of the challenge is so large that the private sector must be involved — governments cannot do this on their own,” the CMHC argued, suggesting solutions that vary from financial support and more construction of social and affordable housing for those with lower incomes, as well as increased supply of housing aimed at the market.
The report, authored by the agency’s deputy chief economist, Aled ab Iorwerth, cited statistics showing Canada has experienced the second-highest rate of growth in house prices among a range of developed countries over the last decade.
Since 2010, the price of housing in Canada has skyrocketed by 105 per cent — just behind New Zealand’s 111 per cent growth — the report released Monday said. By comparison, prices in the United States have grown 47 per cent over the same period.
“Canada has seen the greatest price growth in this group,” the national housing agency said, adding that while real incomes have risen strongly in the country, they have not matched house prices.
The CMHC noted how those with low incomes suffer acutely from high housing costs, despite affordability issues affecting all Canadians. It said affordability challenges are “most intense” for low-income households, who spend a higher proportion of their income on housing.
“Unfortunately, we face immense affordability challenges in many parts of Canada and housing cost burdens for Canadians across the income spectrum,” it added.
It said while lower income households need support such as the federal government’s Canada Housing Benefit, there are concerns with such subsidies as they encourage landlords to charge higher rents. This becomes a particular concern with limited housing supply, the agency explained.
Meanwhile, households with more income also face high rents or costs of homeownership, it said. The CMHC said not enough housing is being built in Canada, whether it’s for rental or homeownership.
A previous report by the agency estimated that an additional 3.5 million housing units are required to achieve affordability by 2030. To address this, it said more private-sector investment is needed to build more supply in the housing market, particularly in the rental sector. “Addressing only one part of the housing continuum risks wasting resources,” the CMHC said.