he current resurgence in rental housing construction is most welcome, but the pace needs to be even faster to fulfill demand in Canada’s largest urban markets, a pair of veteran market observers argued.
In a recent piece for the Financial Post, Murtaza Haider and Stephen Moranis noted that the increase in the number of purpose-built rental (PBR) starts will certainly inject much-needed stock into the inventories of Canada’s most important cities.
Data from Statistics Canada showed that PBR starts stood at 45,569 in 2019, considerably above the 36,796 measured a year prior.
However, the duo also voiced fears that the speed of development “falls considerably short of the rate at which rental units were being built in the early seventies, when rental construction began to nosedive.”
“Changes in tax regulations and the introduction of rent control as vacancy decontrol disincentivized investors who left the rental construction business in droves,” Haider and Moranis explained.
These echoed the warnings by Canadian Centre for Policy Alternatives senior economist Marc Lee, who wrote last month that Vancouver needs at least 10,000 low-cost rental units to address its long-running housing affordability crisis.
Lee added that while there’s no shortage of construction activity in the region, a “severe mismatch” exists between what is being developed and what is actually in short supply
“We’ve had a major building boom in recent years,” Lee told CBC News. “But for some reason, we’re not building the type of housing that we actually need to address the crisis.”
“We need to think a lot bigger,” he stressed. “Generally, we find that we need about 5,000 new rental units per year just to stay level — so just to tread water, but not really to dig in and address the crisis.”
“We need another 5,000 units per year to address the backlog.”
Haider and Moranis stated that the onus is now on the political leadership to ensure the best possible results for their constituents.
“Local, provincial and federal governments must help eliminate or reduce the financial and institutional barriers that have kept the rental construction lagging the demand since the seventies. Given the enormity of the challenge, band-aid solutions will not work.”