Ottawa's housing target falls short of 1.5 million units: CIBC

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According to research by the Canadian Imperial Bank of Commerce, the Canadian government will reduce the number of new homes it needs by about 1.5 million units to address the affordability crisis.

While Canada's national housing agency says the country needs to add 3.5 million additional homes by 2030 to make housing affordable, the real number is actually about five million additional homes, CIBC economist Benjamin Thal wrote on Tuesday. Tal blames the problem on population size, which he says miscounts irregular residents.

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Prime Minister Justin Trudeau's government is grappling with a nationwide spike in housing costs that political rivals have seized on for attacks. Although the government has tried over the years to compensate for the lack of construction with a number of policies to increase supply, it has yet to have a significant impact on the market. It pointed out that the government's attempt to stimulate economic growth by increasing immigration had further thrown supply and demand out of balance.

High interest rates and a slowing economy will further complicate the government's efforts to increase supply. Statistics Canada said on Tuesday that the total value of building permits in Canada fell 14 per cent in December from a month earlier, to the lowest monthly level in more than three years. The total cost of housing permits fell by 17.9 percent, largely due to a significant decline in the intent to permit multi-family housing.

Much of Canada's recent population growth has been driven by non-permanent resident programs — foreign students and temporary workers — that have not been restricted by the federal government and largely driven by demand from educational institutions and employers. The latest move by the Trudeau government was to limit the number of foreign students.

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But CIBC's Tal said that even if the cap works as planned, the growth of other types of non-permanent residents will still account for about two per cent annual population growth, or six million new people over the next seven years. Tal said such growth would come on top of a larger-than-expected population, which would mean Canada would need to build far more housing than the government thought.

“Governments do not have credible forecasts, targets or capacity plans for non-permanent residents – the population that makes up the vast majority of the planning deficit. This has to change,” he wrote. “For all permanent and temporary visa approvals to be meaningful, meaningful forecasting, benchmarking and comprehensive planning must be undertaken.”

In an interview with Bloomberg News, Immigration Minister Mark Miller acknowledged that the recent migration shocks have a direct impact on public policy and agreed that the government “could do a better job of working with aggregate numbers to see what people are dealing with.” .”

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However, he pushed back on suggestions that poorer population projections would lead to matching investments in housing and social services from provinces and cities.

“Even if we project for 10 years, let's not fool ourselves into thinking that people will automatically adapt, because people are elected and unelected based on their ability to deliver on promises,” he said. “They are sometimes elected by cuts.”

— With help from Randy Tantong-Knight.

Bloomberg.com

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