A new report from Desjardins points to the ongoing labour shortage in the construction industry as the primary constraint holding back new housing starts in Canada. Despite the federal government’s vow to unlock 3.87 million new homes by 2031, the report projects there will be a significant shortfall.

While the federal housing plan could translate into nearly 70,000 additional housing starts in 2028 thanks to new measures such as tax incentives and efforts to build more housing on public lands, new housing starts overall still won’t come close to achieving Canada Mortgage and Housing Corp.’s estimated targets for restoring affordability by 2030.

“At the end of the day, building 5.8 million new homes in the next eight years would be an ambitious plan even if all the stars aligned,” the authors wrote, adding it took three decades to build the last 5.8 million homes in Canada.“ With significant labour, materials, financing and regulatory constraints, the stars aren’t currently aligned in Canada.”

According to an article by The Canadian Press, Canada needs more than one million additional residential construction workers to meet CMHC’s target as per estimates from the Canadian Home Builders’ Association.

“Amid slower population growth and an immigration system that is not focused on attracting skilled tradespeople, an even greater share of domestic resources will need to be dedicated to residential investment to meet federal housing targets,” it said.

Elevated interest rates and inflation have also increased the cost to finance construction projects, as have regulations such as those requiring builders to use more costly climate-resistant building materials due to extreme weather.