An Intro to Our Economic Study, The Impact of Community Housing on Productivity
11 Jan 2024
In November 2023, CHRA, Housing Partnership Canada, and our sector partners released our economic study, The Impact of Community Housing on Productivity. This study, authored by Deloitte, finds a causal connection between the proportion of community housing within the overall housing stock and gains in economic productivity.
Over the coming months, we’ll feature a series of blog posts examining some of the key findings, the research background, the methodology behind the report, and more. Read on to get an introduction and overview of the study.
Background and study goals
Housing affordability has deteriorated over the past two decades in Canada. It’s estimated that approximately 2.6 million Canadians are in core housing need. Several factors have contributed to the scale of the current challenge, including a reduction in the share of our housing that is devoted to community housing.
In addition to a housing crisis, Canada’s economy also faces a productivity problem. Our labour productivity growth lags our international peers and has continued to decline in the post-pandemic period. To improve economic performance without further igniting inflationary pressures, Canada needs to find ways to boost its potential output.
The goal of the research was to review the literature on the link between affordable housing and productivity growth and build an econometric model to test if the data in Canada supports a direct causal relationship between the stock of community housing and our economic productivity. The analysis examines possible additional benefits if we see increased investment in community housing.
Our study has found:
- A relationship between community housing and economic productivity.
- That increasing the share of community housing units from its current level to the OECD average of 7% by 2030 will improve our productivity and boost GDP by $110 billion to $179 billion in 2030. Considering the opportunity cost of shifting new housing construction from more expensive private dwelling to community housing units, the additional units of community housing would contribute between $67 to $136 billion to GDP by 2030.
- That investments in community housing boost our productivity and that in turn, means that these investments boost our economy’s potential output growth. This supports a stable increase in community housing investment with dedicated funding for Northern, rural and off-reserve Indigenous communities.
The study demonstrates that the economic impacts of housing are felt not only by individuals, households, and communities; they are felt throughout the economy.
- Increase investment in community housing to boost Canada’s GDP. Our research shows that nearly one quarter of all homes built over the next seven years will have to be community housing if we are to hit the OECD average. Increasing the proportion of Canada’s community housing stock by 1.5 percentage points would boost GDP by $67 to 136 billion: a significant and tangible impact to the Canadian economy.
- Generate a stable pipeline of community housing projects. Generating a stable pipeline of community housing projects requires funding, financing, and tax incentives to build new homes, and equip community housing providers with the resources to renew or acquire existing units.
- Provide dedicated funding for off-reserve Indigenous communities. Indigenous communities face some of the highest core housing need in the country. Differentiated and culturally appropriate solutions along with dedicated funding are needed to address the needs of Indigenous communities.
- Improve collaboration on tackling the housing crisis. The scale of the challenge urgently requires improved coordination and alignment between different levels of government, industry stakeholders, and advocates. This includes shared targets for builds, labour strategies related to housing, and leveraging underutilized land to build new units.
- Promote innovation to tackle supply challenges. Policy measures should be put in place to support the scale up and market penetration of innovative approaches to building housing more quickly, sustainably, and affordably. These approaches can include novel construction technologies, pre-approved housing designs, and use of underutilized spaces.
Check out our economic study, The Impact of Community Housing on Productivity to learn more about the significant and tangible contributions that the community housing sector, and affordable housing make to Canada’s economy.