The lack of housing affordability in Canada is a full-blown crisis, and it will take a co-ordinated effort, significant capital over many years and new approaches to solve it.
That was the underlying message heard at the Scotiabank Affordable Housing Summit, an annual event that brings together real estate companies, non-profits, municipal organizations and other key stakeholders and experts to explore the problem and potential solutions.
“The reality is that housing is expensive to build and operate, and we need a range of housing types across Canada,” said Scotiabank’s Global Head of Capital Markets Paul Scurfield in his opening remarks at the recent virtual event. “Increasing the housing supply is going to require capital, strong government policies, innovation and partnerships.”
The one-day summit held in March featured panel discussions and Q&A sessions with 40 panellists and moderators on topics ranging from Indigenous housing to Canada’s housing and labour supply and innovative partnerships. The Bank’s Affordable Housing Summit was first established in 2021 in response to a growing call from clients and Canadians more broadly to understand the housing market and make progress in improving availability of affordable housing — defined as housing that costs 30% or less of a household’s before-tax income.
This year’s summit theme was Building in Uncertainty, referencing the fast-changing political and economic conditions, such as tariffs. The newly elected Liberals under Mark Carney have vowed to double the number of homes built annually. This would involve the creation of an entity called Build Canada Homes that would act as a developer overseeing construction of affordable housing.
In 2022, the Canada Mortgage and Housing Corporation estimated that Canada needs 5.8 million new homes by 2030 to achieve affordability, and even with a conservative price estimate for each home, the cost will be in the trillions, Scurfield added.
“There is no single group in Canada that can solve our housing challenges,” he said. “It will take all levels of government and a range of private sector stakeholders to be aligned and focused on action. We all know what the problems are. Now we have to work to solve them.”
Here are some key themes and points from the summit:
The need to increase the housing supply
Demand for housing in Canada remains high, even if population growth slows down a bit after policy changes by the federal government to scale back immigration, particularly as interest rates come down and would-be homebuyers look to get into the market. Meanwhile, the housing supply in Canada, as well as our ability to build more housing, has not been able to keep up and prices have risen accordingly. There has been a roughly 36% increase in home prices in Canada since late 2019. An analysis by Scotiabank Economics shows that one-third of that 36% increase can be attributed to population growth, but two-thirds of the price jump stems from the supply-demand imbalance, underlining the importance of boosting supply to respond to unrelenting demand. Although there has been softening in the condo market in recent years, millions of homes will still need to be built in Canada to reach housing affordability.
Need for innovation
Technology advances can play a role in accelerating the construction process, real estate developers say. For example, artificial intelligence has the potential to speed up development of construction drawings. As well, there is experimentation in the U.S. with the use of robots to plot out the layout of a building, such as walls, on the concrete floor during the construction, doing so faster and more efficiently, one panel heard. However, these advances and resulting efficiencies will not be a panacea. On the policy side, there are examples of innovation in British Columbia, where home prices have long been the highest in Canada and affordability has been an issue for decades. For example, the province has introduced a home-flipping tax that applies to the profit earned from selling a property within two years of buying it. B.C. also recently introduced short-term rental legislation that limits rentals to only properties that are owner-occupied, and those that don’t comply face hefty fines.
Indigenous home ownership
While the housing crisis across the country is a relatively new phenomenon, Indigenous Peoples have faced housing difficulties for decades. Particularly on reserve, there has been a chronic shortage of available units, overcrowding, limited financial ability to conduct adequate maintenance and retrofits, and more. In addition, because the Indian Act forbids the use of homes or land on reserve as security against a mortgage, accessing capital for home ownership has been difficult. Indigenous organizations such as the First Nations Market Housing Fund work with First Nations to build their capacity to manage the complexities of land management and dealing with financial institutions to help them increase levels of home ownership by their members and provide some financial backstops to help individuals become homeowners. Meanwhile, the economic development arms of some bands, such as the Squamish Nation in the present-day Greater Vancouver area, have embarked on large-scale housing development projects that incorporate Indigenous values of community while working with partners to generate benefits for Indigenous and neighbouring non-Indigenous communities alike. In each case, Indigenous Peoples need partners who understand the legal, regulatory, financial and other hurdles that need to be overcome in order to solve the housing problem.
Align policies across governments of all levels
Real estate developers called for a re-examination of the various policies at various levels of government that add to the overall cost of building new housing, amounting to as much as 26% of the overall cost. This ranges from development cost charges (DCCs) – one-time fees levied by municipalities to help cover the capital costs of infrastructure, such as roads, to support new development – to property taxes and HST. While purpose-built housing – homes built specifically for renting or long-term tenancy – can qualify for a deferral of DCCs in some municipalities or a rebate on GST/HST, developers said during the summit that housing of many different types are required to ramp up supply and improve housing affordability. Meanwhile, as the construction industry is facing a shortage of workers, there was also a call to align federal and provincial immigration policies in order to attract a labour force with the right skillset to build the millions of homes needed in the coming years. An estimated 187,000 workers will be required over the next decade.
The importance of partnerships
A recurring theme during the summit was that no one stakeholder can tackle the housing problem on their own, but all – from governments at all levels, to corporates, to non-profits and more – have to work together. One panel focused on how corporates need to identify and work with non-profits who have the expertise in various aspects of the crisis to make an impact. Those challenges can include ensuring there is adequate housing for employees of those companies, supporting non-profits that help train the next generation of skilled tradespeople needed to build the housing, and organizations that help newcomers find housing and settle into their adopted communities. Giving employees the opportunity to volunteer with those non-profits can also increase connections with those communities and increase the impact the corporate sector can have in helping solve the problem.
In her closing remarks at the summit, Meigan Terry, Chief Corporate Affairs and Sustainability Officer at Scotiabank, highlighted that theme, and said it's clear that the ongoing lack of affordable housing is a complex problem and no single group can tackle it on their own.
“We all have a role to play, and we must work together on this major challenge.”
