Removal of trade barriers could spur 30K more housing starts annually: CMHC

Key Takeaways:

• CMHC estimates eliminating interprovincial trade barriers could add over 30,000 housing starts annually, helping to close Canada’s supply gap.
• Household incomes could rise by 6%, with rents increasing only half as much, easing rental market pressure.
• Transportation costs, not regulation, are the main obstacle to cross-province construction material trade—prompting calls for infrastructure investment.

The Whole Story:

Could removing interprovincial trade barriers boost Canadian housing starts by 30,000 units?

New modelling by the Canada Mortgage and Housing Corporation thinks so.

The federal housing agency says that number could push annual housing starts close to 280,000, helping to narrow Canada’s housing supply gap and improving access to homeownership and rentals over time.

CMHC’s analysis follows a major shift on Canada Day, when the federal government significantly reduced internal trade barriers. Several provinces — including Nova Scotia, Prince Edward Island, Quebec, Ontario, Manitoba, Alberta and British Columbia — have also moved to cut red tape through new legislation or interprovincial agreements.

The agency says reducing these barriers could improve economic productivity, raise household incomes by about six per cent, and lead to 300,000 more households initially gaining access to homeownership. By 2035, that number is expected to level off to around 150,000 as increased demand pushes prices upward. Meanwhile, about the same number of rental units could become available to tenants upgrading their housing situation.

Still, CMHC notes that boosting supply alone may not make homeownership more affordable without addressing other bottlenecks, particularly in transportation. A Statistics Canada survey found nearly half of construction firms cite high transportation costs or long distances as the main reasons they don’t buy materials across provincial lines.

“Canada has ample domestic production of wood, aluminum, iron and steel,” the agency said, pointing to the country’s position as a net exporter of those core construction materials. “But unless we improve west-to-east transportation infrastructure — including rail, highways and remote seaports — these trade reforms won’t reach their full potential.”

While concrete, cement and machinery still rely heavily on imports, CMHC says better use of Canadian-made construction inputs combined with interprovincial trade liberalization could help meet the estimated housing supply needed to restore affordability to pre-pandemic levels over the next decade.

The agency characterized recent legislative moves as a nation-building opportunity, calling for long-term investment in domestic infrastructure to fully realize the economic and housing benefits of a more integrated Canadian market.