Housing Starts and Housing Supply in Canada: The Impact on the Housing Market
Canada’s housing market has reached a breaking point. With population growth and immigration surging ahead, new home construction just isn’t keeping pace. The result? A growing affordability crisis that’s locking more and more Canadians out of homeownership. In this article, we’ll break down what housing starts really mean, what’s behind Canada’s sluggish supply growth, and how this imbalance is shaping the 2023 housing market. Let’s dive in.
Understanding Housing Starts in Canada
Housing starts mark the beginning of residential construction. It’s the stage where the foundation is poured or, if there’s no basement, where the main structure kicks off. This is a key metric tracked by the Canada Mortgage and Housing Corporation (CMHC) and is often used to gauge the health of the housing market.
Over the last few decades, housing starts in Canada have fluctuated widely. Since 1977, the national average has hovered around 191,000 units per year. The high point? March 2021, with 321,000 starts—largely due to the backlog of projects unpaused post-pandemic. The lowest was August 1982, when housing starts plummeted to just 90,000 units.
What Affects Housing Starts in Canada?
1. Economic Conditions
Strong economic growth usually fuels housing demand, which increases housing starts. But when uncertainty or recession creeps in, builders hold back, and construction slows down.
2. Immigration and Population Growth
Canada’s population is booming, especially after pandemic-era slowdowns in immigration. We’re now welcoming about 500,000 newcomers annually, and that number isn’t likely to dip soon. Unfortunately, the pace of home construction hasn’t caught up—leading to major supply gaps.
3. Government Policy and Red Tape
From zoning restrictions to permitting delays, government regulations can slow housing starts significantly. While some municipalities are pushing pro-housing reforms, the speed of change has been far too slow to meet today’s needs.
Housing Starts vs. Housing Supply: The Real Issue
Even when housing starts pick up, it takes years before those homes are move-in ready. Meanwhile, demand is skyrocketing in urban centres and beyond. The result? A persistent supply crunch.
The Numbers Behind the Crisis
CMHC estimates that Canada needs an additional 3.5 million homes by 2030 to restore affordability. That means we need to double the current pace of building. Provinces like Alberta and Quebec are doing relatively well—but even they may fall short as population growth accelerates.
How This Impacts You
Less supply means fewer options and rising prices. First-time buyers are getting squeezed out, bidding wars are inflating prices, and renters can’t afford to save for a down payment. It’s a vicious cycle—and it’s getting worse.
How Canada Can Address Its Housing Supply Shortage
1. Fast-Track Construction Through Policy Reform
Governments at all levels need to cut red tape. Streamlined permits, zoning reform, and incentives for builders can remove major bottlenecks.
2. Partner With the Private Sector
Public-private partnerships can accelerate affordable housing development. When governments provide land or funding, builders can move quicker—and focus on projects that help middle-income families.
3. Prioritize Affordable and Inclusive Housing
It’s not just about building more—it’s about building smarter. Inclusionary zoning policies can mandate that a percentage of new housing developments be designated as affordable.
The 2023 Housing Market Outlook
So what’s ahead? The rest of 2023 looks like a mixed bag. A mild recession may cool demand, but interest rates are expected to remain stable, which could help buyers regain some purchasing power. That said, the supply crisis won’t solve itself overnight.
If enough homeowners list their properties to cash in on high prices, supply may loosen slightly. But the long-term solution lies in new construction—backed by smart, aggressive policy.
FAQ: Housing Supply in Canada
Q: Is there really a housing shortage in Canada?
Yes. Population growth has far outpaced housing construction, leading to chronic undersupply.
Q: Why is housing so unaffordable?
Low supply and high demand are the biggest drivers. Interest rate hikes have also worsened affordability.
Q: Will housing become affordable again?
Only if governments take bold steps to boost supply and rethink affordability strategies.
Q: Should I buy now or wait?
That depends on your finances and location. With interest rates steadying, now might be a smart time to buy—especially if prices plateau.
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Final Thoughts: Building Toward a Solution
Canada’s housing crisis won’t fix itself. Unless we significantly increase housing starts and tackle regulatory barriers, the affordability gap will continue to widen. But with the right policies and a nationwide commitment to change, we can move toward a future where everyone has access to a home they can afford.
🏘️ Housing Starts vs. Demand in Canada – Provincial Snapshot (2025)
Despite growing demand, most provinces are falling short on new housing construction. Here’s a quick comparison of how many homes are needed annually vs how many are actually being built in key provinces:
| Province | Annual Housing Demand (2025) | Projected Housing Starts | Gap (Shortfall) |
|---|---|---|---|
| Ontario | 110,000 | 73,500 | -36,500 |
| British Columbia | 55,000 | 38,000 | -17,000 |
| Quebec | 45,000 | 34,000 | -11,000 |
| Alberta | 40,000 | 33,500 | -6,500 |
| Nova Scotia | 12,000 | 6,800 | -5,200 |
🏗️ Note: Based on CMHC and provincial forecasts. Actual numbers may vary with immigration trends, zoning changes, and economic shifts.
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Clara Desai
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