Policy reform could be a key contributor to easing Canada’s housing and affordability crisis

According to the Canada Mortgage and Housing Corporation (CMHC), the country needs an additional 3.5 million new housing units by 2030 to address surges in demand that are driving up prices.

New Concordia research led by Erkan Yönder, associate professor of finance and real estate at the John Molson School of Business, in partnership with Equiton, a Canadian private equity firm, examines the supply side of the equation.

In the study, “Breaking Ground: AI-Driven Analysis of How Policy Reform Can Unleash Canadian Housing Supply,” Yönder found that Montreal’s median home price could rise to $800,000 by 2032; Toronto’s to $1.8M and Vancouver’s to $2.8M if current trends continue.

“This is the first time that data-driven models have been used to quantify the complicated interplay between demographics, input costs, housing supply and home prices in Canada,” Yönder says.

“We found that improving regulatory efficiency and streamlining approval processes can be a low cost and effective way to promote housing supply and even increase completions by 10 per cent.”

AI tool reveals housing supply trends

Focusing on Toronto, Montreal, Calgary and Vancouver, Yönder used a form of artificial intelligence called a neural network. The AI processed volumes of public data from the CMHC and Statistics Canada, as well as predictions from the Government of Canada, to forecast a variety of scenarios.

It also analyzed factors including municipal-level regulation indices, input price fluctuations caused by events like the United States tariff increases, and population and demographic factors.

The data covers 2017 to 2025.

“We were able to create a comprehensive, dynamic view of housing supply trends that illustrated how regulatory conditions and global factors such as tariffs come together to shape Canada's housing market.”

Different cities, different approaches

Looking at the factors that affect housing prices across Canada’s major markets reveals there is no one-size-fits-all solution.

“The research demonstrates that real estate is a national issue that is intensified in certain regions,” says Christopher Wein, Chief Operating Officer at Equiton’s dedicated development arm Equiton Developments.

“The neural network AI gave us a deeper kind of forecasting that wasn’t available before. It's an amazing tool both for defining opportunities and mitigating risk.”

Research highlights

• A 10 per cent decrease in building restrictions could raise annual home completions by almost 10 per cent of the total housing supply.
• A 10 per cent reduction in approval delays could add another three per cent.
• A 10 per cent increase in input costs — primarily materials, but also taxes, fees, and labour — could reduce average housing completions by 25 to 35 per cent, with the greatest impact on apartment-style housing.

Regarding regional findings, the study showed that:

• Doubling completions in Toronto could bring the median home price down to $1.6M from the projected median price of $1.8M.
• Doubling completions in Vancouver could only moderate median home prices to around $2.5M.
• For Montreal, prices continue to rise regardless of supply scenarios because completions are so far behind demand, while in Calgary, housing price growth is more sensitive to population shifts than completions. 

Moving beyond supply

Overall, the researchers found that streamlining regulatory frameworks and approval processes could offer a boost to housing outcomes in major markets. And collaboration between all levels of government, developers and the public is key to reducing costs and supporting development that is affordable.

Still, Yönder notes that streamlining regulatory and approval processes, stabilizing construction costs and increasing supply are not enough. The report cites additional challenges, such as a lack of skilled labour, ever-increasing costs and the time it takes to increase housing supply.

“The research shows how much pressure we’re putting on Montreal, Toronto and Vancouver,” he says. “As a country, we should look at building up new economies in other cities. We really need to find collective solutions.”

Supporting innovation in real estate research

This research is the third output of the Equiton Research Fund in Real Estate at John Molson, a partnership between Concordia and the private equity firm to support innovative research into Canada’s real estate investment landscape.

The first paper used artificial intelligence to predict the future cost of rent. The findings were widely disseminated among policymakers, with citations even reaching the floor of the House of Commons.

The second provided a comprehensive assessment of how Canada’s real estate market can remain well-positioned in the face of climate change and subsequent climate migration.

Read the cited paper: Breaking Ground: AI-Driven Analysis of How Policy Reform Can Unleash Canadian Housing Supply.