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Housing completions not keeping pace with population

Published

1 year ago

3 minute read

From the Fraser Institute

Author:

Josef Filipowicz
Senior Fellow, Fraser Institute

2018 to 2022, population growth averaged more than 550,000 per year compared to only 200,000 new homes

In Canada, the gap between the number of homes built and the number of additional people is the widest it’s been in 50 years, finds a new study released today by the Fraser Institute, an independent, non-partisan, Canadian public policy think-tank.

“Canada faces an historic gap between population growth and the number of homes built—and Canadians are paying the price,” said Josef Filipowicz, senior fellow at the Fraser Institute and author of Canada’s Growing Housing Gap: Comparing Population Growth and Housing Completions in Canada, 1972-2022.

From 2018 to 2022 (the latest year of available data), Canada’s population grew by 553,568 people (each year, on average) compared to an annual average of only 205,762 new homes built.

In other words, over the last five years housing completions equalled less than 40 per cent of population growth—a stark difference from the early 1970s when population growth almost equalled housing completions. Specifically, from 1972 to 1976, the population grew (on average) by 299,843 people per year compared to an average of 237,853 new homes built.

In the most populous province, we see similar trends. During the same five-year period (2018 to 2022), Ontario’s population grew by 239,915 people (each year, on average) compared to an annual average of only 70,828 new homes built.

“Until policymakers help close the gap between supply and demand, affordable housing will remain out of reach to an ever-greater share of Canada’s population,” Filipowicz said

Main Conclusions

  • This research bulletin compares annual population growth in Canada with housing completions between 1972 and 2022.
  • The growth of the population reached its highest point, nationally and in every province, in 2022.
  • Meanwhile, housing completions have stabilized or declined. Nationally, Canada has yet to build more homes annually than it did during the 1970s. This is also the case in 9 out of 10 provinces.
  • Throughout most of this period, Canada’s population grew by one to three people for every housing unit completed the previous year.
  • In 2022, population grew by 4.7 people for every unit completed the previous year—higher than at any other time.
  • Among the provinces, this ratio ranges from 2.8 people per home completed in Quebec to 11.3 people per completion in New Brunswick in 2022.
  • Without closing the wide, growing gap between housing demand (population growth) and housing supply (housing completions), Canadians’ current struggles with high housing costs are likely to persist, if not worsen.

 

Click to see the full report

 

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Published on November 21, 2024

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For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).

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In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.

This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.

Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.

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Alberta fiscal update: second quarter is outstanding, challenges ahead

Published on November 21, 2024

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Alberta maintains a balanced budget while ensuring pressures from population growth are being addressed.

Alberta faces rising risks, including ongoing resource volatility, geopolitical instability and rising pressures at home. With more than 450,000 people moving to Alberta in the last three years, the province has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported. Alberta’s government is determined to make every dollar go further with targeted and responsible spending on the priorities of Albertans.

The province is forecasting a $4.6 billion surplus at the end of 2024-25, up from the $2.9 billion first quarter forecast and $355 million from budget, due mainly to higher revenue from personal income taxes and non-renewable resources.

Given the current significant uncertainty in global geopolitics and energy markets, Alberta’s government must continue to make prudent choices to meet its responsibilities, including ongoing bargaining for thousands of public sector workers, fast-tracking school construction, cutting personal income taxes and ensuring Alberta’s surging population has access to high-quality health care, education and other public services.

“These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”

Nate Horner, President of Treasury Board and Minister of Finance

Midway through 2024-25, the province has stepped up to boost support to Albertans this fiscal year through key investments, including:

  • $716 million to Health for physician compensation incentives and to help Alberta Health Services provide services to a growing and aging population.
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  • $847 million for disaster and emergency assistance, including:
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  • $240 million more for Seniors, Community and Social Services to support social support programs.

Looking forward, the province has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. It expects to earn more for its crude oil, with a narrowing of the light-heavy differential around US$14 per barrel, higher demand for heavier crude grades and a growing export capacity through the Trans Mountain pipeline. Despite these changes, Alberta still risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.

After a 4.4 per cent surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5 per cent in 2025, lower than the first quarter forecast of 3.2 per cent growth because of reduced immigration and non-permanent residents targets by the federal government.

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Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:

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Expense

Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.

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After calculations and adjustments, $2.9 billion in surplus cash is forecast.

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Contingency

Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.

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The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.

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Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.

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