Canada's Housing: Solutions from RBC Economics

Canada's Housing: Solutions from RBC Economics
April 22, 2024

Canada's housing market faces a complex crisis, with affordability becoming a major hurdle for both homeownership and rentals. A report by RBC Economics, titled "The Great Rebuild: Seven ways to fix Canada's housing shortage," dives into the causes and proposes a multi-pronged approach to address this critical issue.

Facts Highlighting the Crisis

  • Price Surge: The national average house price in Canada skyrocketed by a staggering 21.2% in 2021 [SOURCE: Canadian Real Estate Association], far exceeding average wage growth.
  • Rental Squeeze: Vacancy rates in major cities hover around 2%, significantly lower than the healthy benchmark of 3% [SOURCE: Canada Mortgage and Housing Corporation], leading to fierce competition and rising rents.
  • Generational Impact: Statistics Canada reports that in 2020, the average first-time homebuyer needed to dedicate 20.4% of their pre-tax income to afford a mortgage – a stark contrast to the historical average of around 10%.

Causes of the Crisis

  • Supply vs. Demand Imbalance: Canada's housing stock simply hasn't kept pace with a growing population. Immigration has been a significant factor, with Canada welcoming over 400,000 new residents in 2021 [SOURCE: Immigration, Refugees and Citizenship Canada].
  • Construction Bottlenecks: The construction industry faces labor and material shortages, pushing up construction costs and slowing down new housing projects.
  • Low Interest Rates & Pandemic Stimulus: Historically low interest rates and government stimulus programs during the pandemic fueled a housing market frenzy, further inflating prices.

Solutions Proposed by RBC Economics

1. Boosting the Construction Workforce (RBC Target: 100,000 New Workers)

  • Streamlined Immigration: Prioritize construction skills for immigrants and streamline credential recognition for foreign-trained workers.
  • Skilled Trades Focus: Significantly increase trade school enrolments and apprenticeship opportunities for construction trades.

2. Building Faster and Smarter

  • Prefabricated Construction: Promote the use of prefabricated housing components to expedite construction times and improve efficiency.
  • Standardized Designs: Develop and approve pre-approved building designs to streamline the approval process.

3. Speeding Up Project Approvals

  • Digital Transformation: Leverage technology like Artificial Intelligence (AI) to automate and expedite permit approvals.
  • Prioritization: Streamline permitting processes and prioritize projects with faster turnaround times.

4. Encouraging Denser Housing

  • Zoning Reform: Review and revise zoning regulations to allow for more multi-unit dwellings (apartments, townhouses) in desirable locations.
  • Mixed-Use Development: Incentivize the conversion of underutilized commercial properties into mixed-use developments that include residential units.

5. Reducing Building Costs

  • Cost-Effective Materials: Promote the use of innovative, cost-effective building materials while maintaining safety standards.
  • Reviewing Government Charges: Evaluate and potentially moderate government development charges to reduce upfront costs for builders.

6. Shifting the Housing Mix

  • Focus on Rentals: Provide incentives for developers to build more purpose-built rental units to address the growing demand.
  • Evolving Ownership Models: Acknowledge that homeownership rates may decline due to affordability challenges, and encourage alternative models like co-operatives or co-living arrangements.

7. Optimizing Existing Housing Stock

  • Secondary Suites: Simplify regulations and incentivize the creation of secondary suites (basement apartments) in existing single-family homes.
  • Adaptive Reuse: Explore the conversion of suitable non-residential buildings into affordable housing units.
  • Short-Term Rental Regulation: Implement regulations to limit the number of short-term rentals (e.g., Airbnb) and encourage these units to return to the long-term rental market.


Canada's housing crisis necessitates a collaborative effort. By implementing these solutions proposed by RBC Economics, along with additional measures from governments and other stakeholders, Canada can work towards building a more sustainable and affordable housing market for all.


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