To move the dial and catalyze a positive cycle of homebuilding, affordability and economic growth, governments must create comprehensive programs that streamline approvals and collaborations between government, industry and the public.
This is according to 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 real estate firm.
In the study, "Build and Benefit: How Homebuilding Incentives Can Pay Off for Cities, Homeowners and Local Economies," Yönder found that increasing housing supply by addressing barriers to completion improves affordability. More housing stimulates economic activity, grows the municipal tax base and helps offset the initial investment of a supply incentive program.
"Our findings show that regions that reduce barriers to supply, such as long approval times, add public incentives and successfully drive new housing supply see measurable improvements in affordability," Yönder says.
He measured affordability based on a Mortgage Pressure Index created for the purposes of the study - the ratio of annual mortgage payments to annual household income relative to housing completions in 2024.
These improvements have a domino effect, he says.
"Our model reframes the conversation of incentivizing the creation of new housing supply as a growth strategy," Yönder adds.
"Major investments in supply can therefore be seen as an economic trigger that improves affordability, strengthens local economies and expands fiscal capacity."
Approval delays hurt supply
In this study, Yönder relied on volumes of public data from the Canada Mortgage and Housing Corporation (CMHC) and Statistics Canada. Yönder incorporated data from the Approval Delay Index, part of the Municipal Land Use and Regulation Survey, conducted jointly by CMHC and Statistics Canada in 2022.
"This indicator captures one of the most critical bottlenecks in Canada's housing delivery system - the administrative and procedural delays between project proposal and final approval," Yönder says.
The dataset included key variables such as the number of dwellings and households, average household size, population density per square kilometre, the share of residents working from home, share of residents with a bachelor's degree or higher, and median household income and unemployment rate.
Research highlights
- Housing policy changes that result in more homebuilding can help reshape the affordability picture. For example, a 20 per cent cut in approval delays can mean a 17 per cent improvement in affordability.
- Affordability improvements mean households may have more disposable income, which can support business activity. A 20 per cent improvement in affordability compared to 2024 levels would result in the creation of 15-45 new businesses per 100,000 people.
- A 20 per cent improvement in 2024 affordability levels in Canada's bigger cities reduces median home prices in surrounding areas by five to 15 per cent.
- Canada needs to more than double its annual rate of building to three-and-a-half to four per cent of existing supply before Canadians see affordability improvements.
- Urban centres are at the forefront of the affordability crisis. Toronto would require 96,000 additional new dwellings per year to create relief, more than triple its record level of completions in 2024. Vancouver would need 44,000 additional dwellings, while Montreal and Calgary would need 77,000 and 24,000 more, respectively.
- In the Montreal illustration of the framework, a $2.75 billion housing-supply incentive program could generate roughly $348 million in recurring annual tax inflows, implying a seven-to-eight-year fiscal payback - even before further positive multiplier effects are considered.
"This latest analysis strengthens the case by demonstrating that investments in supply yield not just affordability gains, but attractive, long-run fiscal returns and social benefits that help to offset the initial investment," Yönder says.
Supporting innovation in real estate research
This research is the fourth release of the Equiton Research Fund in Real Estate at John Molson, a partnership between Concordia and the Canadian 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.
The third looked at policy reform, finding that improving regulatory efficiency and streamlining approval processes could increase completions by 10 per cent of the total supply.
Read the cited paper: "Build and Benefit: How Homebuilding Incentives Can Pay Off for Cities, Homeowners and Local Economies."
