While Canada is on track to build 2.5 million new homes by 2035, it will not be nearly enough to close the housing gap and meet demand, a new report by the Parliamentary Budget Office on Tuesday said.
According to PBO’s projections, those 2.5 million new homes will still be 690,000 homes short of the 3.2 million new homes that Canada would need to meet its housing demand over the next 10 years.
Closing the housing gap in Canada with 3.2 million net new housing units by 2035 would require 290,000 total units to be completed annually, on average, over 2025 to 2035.
“This pace of housing construction would be equivalent to outperforming the record high of 276,000 units completed in 2024 for 11 consecutive years,” the report said.
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PBO’s estimates for Canada’s housing requirements are well below the estimates of the Canada Mortgage and Housing Corporation, which projects that Canada will need 5.3 million new units over 2025 to 2035 —an annual construction rate of 478,000 new homes.
However, the report added that lowering immigration levels could also contribute to lower demand. In 2024, Canada reached a historic high with 482,000 new households being added to the economy.
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PBO projects that household formation will decline sharply in 2025 and 2026 and will remain below its historical average of 176,000 until 2030, “reflecting policy changes made in 2024 by the Government to reduce immigration.”
A key election plank of Prime Minister Mark Carney’s Liberals was doubling the pace of housing construction. On the campaign trail, Carney proposed a range of measures he said would double the rate of housing construction and build 500,000 new homes a year.
The PBO report on Tuesday said its projections do not take into account these policy commitments by the Liberal government.
“Our updated outlook for net housing completions and the housing stock reflects long-term economic and demographic trends and does not include recent policy commitments by the Government to double the rate of housing construction in Canada,” the report said.
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