Canada wants to double construction of houses but cannot find workers

Canada’s housing minister has a big goal ahead of him as his government tries to curb soaring house prices: to double the pace of housing construction in the country within 10 years.

But Ahmed Hussen, who was appointed to the post after last year’s election, says Canada has no choice if it wants to continue to grow its economy and attract skilled immigrants.

“The issue of housing supply is critical to our future success as a country,” Hussen said in an interview.

Home prices in Canada were already high before the pandemic before rising more than 50% in the past two years. Soaring prices have become one of the main political problems in the country.

There is significant debate over what is driving it, with limited housing supply, high levels of immigration, investor activity and rock bottom interest rates all cited as factors. But with young families becoming more expensive to own a home in most major cities, affordability has become a major issue for Prime Minister Justin Trudeau’s Liberal government.

His political rivals are interested in it. Pierre Poilievre, the frontrunner in the opposition Conservative Party leadership race, tweeted a video last week that lambasted housing costs and blamed the Liberals’ spending record, as well as city government ‘gatekeepers’ .

Increasing supply was the centerpiece of the housing plan presented in the Trudeau government’s spring budget. He said Canada has averaged about 200,000 new homes a year over the past few years and has pledged to “double our current rate of new construction over the next decade”.

The plan quickly drew skepticism from analysts. “From dollars to doughnuts, it won’t happen, and it’s not for lack of good intentions,” Robert Kavcic, senior economist at Bank of Montreal, wrote in a note to investors this week.

Kavcic pointed out that housing completions are already at the highest level since the 1970s, that skilled labor in the construction industry is scarce and that city governments will fight any area effort for more density.

Avery Shenfield, chief economist at CIBC World Markets, also doubted the feasibility of the plan given labor constraints.

“Without a targeted immigration plan or a concerted effort to convince young residents to consider picking up a hammer instead of a laptop, we will continue to struggle to increase supply enough to allow more Canadians to own their own castle,” he wrote.

Hussen said he knew that skepticism was there, but argued that his government had already shown it could deliver ambitious programs. Last year, the Liberals pledged to get all provinces to sign on to a universal child care program, and they put the final piece in place last month when Ontario agreed.

“Scepticism may be expressed, but the fact is that we have demonstrated a track record and an ability to build and collaborate with other orders of government,” he said.