With the resources at its disposal, Canada should be able to build 130,000 to 225,000 more homes each year, says the Canada Mortgage and Housing Corporation (CMHC).
Mathieu Laberge, senior vice-president of housing economics and prospects at CMHC, affirms that the full construction potential is far from being reached, while demand remains very strong.
In a just-published post, he notes that in 2023, housing starts have declined slightly from previous peaks, to 240,267.
That year, 650,000 employees worked in the industry in Canada, “unheard of,” according to him.
“With current resources devoted to residential construction, Canada should be able to build 130,000 to 225,000 more homes each year. Achieving this potential will require all sectors to continue to make significant structural changes in the short and long term,” writes Mr. Laberge.
He puts forward a few causes to explain the situation, such as municipal regulations, provincial regulations and the construction industry itself, which is too fragmented.
More specifically, Mathieu Laberge cites factors such as regulations on the number of floors of buildings, the time required to issue building permits and development rights.
He also points out that the industry itself is very fragmented, with 69% of companies having fewer than five employees. “Consolidation could help generate economies of scale, making the construction of affordable housing profitable,” he concludes.
And in Quebec?
In Quebec, the APCHQ believes that the situation is different on certain points, although it also shares the CMHC’s diagnosis regarding an underexploited housing construction potential.
According to the Association of Construction and Housing Professionals of Quebec (APCHQ), we cannot assume, for example, that Quebec could have built between a quarter and a fifth of the number of housing units put forward by the CMHC because Quebec represents this proportion of the Canadian population.
“At the provincial level, we could be more precise in explaining why there is a disparity between the housing that could be built and those that have been built. There are several factors to study in terms of productivity. Yes there is the monetary contribution which is one thing; there is the contribution of individuals which is one thing. But the productivity factor also depends on the structure, on how the construction industry works in Quebec,” explained Francis Montigny, expert advisor in the labor relations department at the APCHQ, in an interview.
Thus, in terms of productivity, he notes that the decision of the Minister of Labor, Jean Boulet, to allow task sharing between certain professions is “a step in the right direction”, although the association would have liked it to go further on this matter.
Mr. Montigny confirms, however, that the deadlines for issuing permits are still too long at the municipal level.
The fact remains that we must not only build, but build so that it remains affordable. However, construction costs are high, he recalls.
Other solutions exist to mitigate the phenomenon; he cites for example the QST exemption on built housing, which would reduce construction costs.
Representing residential construction companies, Francis Montigny does not believe that the size of the companies poses a problem, as the CMHC suggests. “Having more businesses allows for more competitiveness,” he believes on the contrary, and this is more representative of Quebec entrepreneurship.