Addressing Canada’s housing shortage: 10 solutions for governments and the private sector

Canada is in the midst of a housing crisis, with affordability and availability challenges impacting millions. The Canada Mortgage and Housing Corporation (CMHC) estimates that 5.8 million new homes are needed by 2030 to restore affordability, yet current construction rates fall far short of this target. To tackle this issue, both governments and the private sector must adopt innovative and collaborative approaches. Below are ten actionable strategies to address the housing shortage in Canada. 

1. Streamline development approvals

Lengthy zoning and permit approval processes are a significant bottleneck. Municipalities should adopt measures like same-day automated approvals for low-complexity projects, as seen in Edmonton, or reduce processing times by hiring more planners and deploying advanced software, as Kitchener has successfully done. 

2. Reduce development fees

Development charges, which can account for up to 30% of a unit’s cost, need to be reassessed. Temporary freezes or reductions in these fees, as implemented in Vaughan, Ontario, could incentivize developers to build more homes and lower costs for buyers. 

3. Expand modular and prefabricated housing

Modular homes, which can be built 30-50% faster than traditional methods in some cases, offer a scalable solution. Increased government funding and regulatory support for modular housing could help address labor shortages and reduce construction costs. 

4. Leverage Real Estate Development Trusts (REDTs)

Innovative financing models like REDTs can unlock private capital for large-scale housing projects. By raising funds upfront, developers can accelerate construction timelines and deliver housing more efficiently. 

5. Incentivize purpose-built rentals

Purpose-built rental housing is critical for addressing the needs of students, immigrants, and low-income families. Governments should expand tax incentives, such as GST rebates, to encourage developers to prioritize rental projects. 

6. Address labour shortages

The construction industry faces a looming labor crisis, with 300,000 workers set to retire in the next decade. Expanding immigration pathways for skilled tradespeople and investing in training programs for domestic workers are essential to meet future demand. 

7. Reform land use policies

Outdated zoning laws often restrict high-density developments in urban areas. Governments should encourage mixed-use and higher-density projects to maximize land use and increase housing supply in key markets. 

8. Enhance population forecasting

Accurate population projections are critical for planning housing supply. Governments must integrate non-permanent residents into their forecasts to ensure municipalities can plan for actual demand. 

9. Revival of the Multi-Unit Residential Building (MURB) program

The government is considering bringing back the MURB program, which previously encouraged the construction of about 200,000 rental units through tax incentives. If updated for today’s market, a renewed MURB could help boost purpose-built rental housing and address supply challenges, signaling a commitment to improving rental availability. 

10. Introduce density incentives for affordable housing

Municipalities could implement density bonus programs, allowing developers to build higher or denser projects than zoning laws typically permit in exchange for including affordable housing units. This strategy incentivizes developers to contribute to affordable housing supply while maximizing land use efficiency.