According to a new report by the Canada Mortgage and Housing Corporation (CMHC), the number of construction workers in Canada reached a record high of 650,000 in 2023.
All the while, according to CMHC’s calculations, the number of housing starts recorded across the country in 2023 reached about 240,300 units, which is below the maximum potential of building well over 400,000 homes per year.
CMHC suggests that compared to data from the late 1990s and early 2000s, there is now significantly decreased productivity in terms of the number of housing starts compared with the construction workforce population.
If the average labour productivity in the residential construction sector between 1999 and 2004 were used, there should have been 377,000 new housing starts in 2023 — 57% higher or 137,000 more units than what was actually recorded.
This figure grows to 398,000 units — 66% higher or 158,000 more units — when the maximum labour productivity in the residential construction sector between 1997 and 2023 is accounted for.
If the population-adjust housing starts in the best-performing urban regions were taken into account, there would be 429,000 units in 2023, which is a difference of 189,000 units or a 79% increase.
If the maximum population-adjusted housing starts in the best-performing urban regions were used as the baseline, the number of housing starts across Canada would nearly double — increasing by 94% to a total of 465,000 units, representing 225,000 units over 2023’s real figures.
CMHC states it is possible to analyze actual housing starts relative to the construction industry’s maximum potential capacity, similar to economic production and employment.
While the federal and provincial governments have a role to play, CMHC suggests much of the declining productivity in the construction sector can be attributed to how municipal governments operate.
“The discrepancy in housing starts production relative to population across Canadian cities hints that regulation plays a significant role in whether building activity can accelerate — especially municipal regulation,” reads the report.
“Consider the time it takes for things like permit delivery, regulations around how many storeys and units a building can contain, development charges (some are regulated at local and regional levels).”
According to a separate CMHC report, Canada would need to build 3.5 million additional homes by 2030 above the projected baseline in order to see a real improvement in affordability.