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The Parliamentary Budget Officer (PBO) reports that after a record-setting 482,000 new households formed in 2024, household formation is expected to decline sharply in 2025 and 2026 due to federal policy changes that reduce immigration, and remain below the historical average of 176,000 annually until around 2030. In parallel, the PBO projects that net housing completions will stay elevated in the short term—averaging about 256,000 units per year—but will gradually ease back toward historical norms as demand diminishes.
Even with a projected addition of 2.5 million housing units over the next decade (averaging ~227,000 units annually), the PBO estimates a shortfall of approximately 690,000 homes by 2035. This gap accounts for “suppressed household formation” (about 714,000 units) and the number of units needed to return the national vacancy rate to its long-term average. Closing this gap would require building roughly 290,000 units per year—surpassing Canada’s 2024 record of 276,000 annual completions—for an entire decade.
The Canada Mortgage and Housing Corporation (CMHC) projects a much larger housing supply gap—2.6 million additional units—based on affordability metrics rather than vacancy rents. Under its business-as-usual scenario, CMHC expects 2.7 million units to be built over the next decade, but estimates a total need of about 5.3 million units to restore affordability—well above the PBO’s 3.2 million-unit target. The PBO cautions that pursuing CMHC’s higher target could result in dramatically elevated vacancy rates—potentially reaching 13% by 2035—and lead to overbuilding with many unoccupied homes or second residences.
Read the full article on: Global NEWS
