A higher rate of housing completions in the next few years will help recalibrate the dynamic between Canadian housing supply and demand to more reasonable levels, according to a new study by Oxford Economics.
In the report, co-authors Tony Stillo and Michael Davenport estimated that over the next 10 years, housing completions nationwide will total roughly 2.2 million units, “far outpacing the formation of 1.9 million new households.”
“This will help rebalance supply and demand in Canada’s housing market and will result in house price growth falling below that of household income growth for the rest of the decade,” Stillo and Davenport said.
The authors added that this more stable status quo is likely to prevail for a long time.
“From 2030 onward, we expect additions to the housing stock will closely match underlying housing requirements,” the duo wrote. “With a balanced housing market in the long run, we project house prices to rise in line with household incomes and remain within their capacity to borrow.”
Oxford Economics predicted that in the next three decades, Canada will likely see the formation of approximately 4.8 million new households, raising the country’s total number of households from around 15 million last year to as much as 20 million in 2050.