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Canada Grapples with Housing Shortage Crisis Amid Skilled Tradespeople Shortage

Canada's housing crisis deepens with a need for 3.5 million homes, hindered by skilled tradespeople shortage and rapid population growth.

By Athena Xu

4/3, 19:00 EDT
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Key Takeaway

  • Canada needs 3.5 million homes to restore affordability, hindered by a skilled tradespeople shortage.
  • The Canadian government's budget focuses on affordable housing, with strategies like using government land and offering tax incentives.
  • Measures to aid young homebuyers, including easing mortgage rules, are expected in the upcoming budget.

Canada Faces Housing Shortage Crisis

Canada is grappling with a significant housing shortage, with a need for an additional 3.5 million homes to restore affordability, according to a 2022 study by Canada’s national housing agency. This crisis is exacerbated by rapid population growth and a lack of skilled tradespeople, making it challenging to meet the construction pace required to address the shortage. Paul Morassutti, CBRE Group Inc.’s chairman in Canada, emphasized the severity of the situation at the Vancouver Real Estate Forum, stating, “The inconvenient truth is that we are not going to hit those targets — we will likely not get anywhere close to those targets.” The shortage of skilled tradespeople means that even with approvals for construction, the physical capability to build is lacking.

Government's Response to the Housing Crisis

In response to the housing crisis, the Canadian government, under Finance Minister Chrystia Freeland, is focusing on affordable housing in its upcoming budget. The budget, set to be released on April 16, includes strategies to speed up construction and boost the supply of affordable homes. This includes potentially using government land for construction, offering cheap leases to developers, and setting up a fund to buy provincial and municipal land for affordable housing projects. Additionally, the government is considering temporary tax incentives to encourage real estate investors to sell buildings to non-profit housing organizations and tax credits for investors in affordable housing projects.

Targeted Measures for Young Homebuyers

The Trudeau administration is particularly concerned about the impact of housing affordability on young Canadians, a demographic crucial to the Liberal Party's support base. The upcoming budget is expected to introduce measures to aid young homebuyers, including potentially easing mortgage rules to facilitate access to the housing market. Housing Minister Sean Fraser indicated that the budget would address challenges that disproportionately impact young Canadians, aiming to make home ownership more attainable for this demographic.

Street Views

  • Paul Morassutti, CBRE Group Inc. (Neutral on Canada's housing market):

    "The inconvenient truth is that we are not going to hit those targets — we will likely not get anywhere close to those targets... Even if we had approvals across the country to build thousands of units, we cannot physically build them, because we don’t have enough trades." "Income inequality and housing affordability are very pernicious issues. Left unaddressed, the damage to our social and economic fabric will only worsen."