Economic Study: The Impact of Community Housing on Productivity

Community housing is more than a social good – it’s an economic necessity

Canada is struggling through a dramatically worsening housing crisis. Millions of Canadians, particularly those with lower incomes, have been experiencing rapidly rising housing costs, driven in large part by an extreme supply shortfall. This problem isn’t isolated to specific communities, regions, or provinces.

Approximately 2.6 million Canadians are in core housing need, with experiences varying across provinces and territories. 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 productivity.

Community housing and economic productivity

CHRA, Housing Partnership Canada, and our sector partners commissioned Deloitte to produce a study on the impact of community housing on Canada’s economic productivity. The analysis in this report, The Impact of Community Housing on Productivity, finds:

There is a causal connection between the proportion of community housing within the overall housing stock and gains in economic productivity.
Bringing Canada’s community housing stock to the OECD average by 2030 would boost economic productivity by a staggering 5.7% to 9.3%.
The economic benefit would increase GDP by an estimated $67 billion to $136 billion, without adding to inflation since gains in productivity boost our economy’s ability to grow.
CHRA estimates that gains to the economy will outweigh the costs within two years of hitting the target.
The economic gains are from the productivity-enhancing benefits ofhaving more community housing, rather than just the stimulus impact of building new homes. The impact is derived from addressing five productivity-depressing phenomena:
- Geographical mismatch between workers and jobs that are the best fit;
- Diminished human capital accumulation due to poor living conditions;
- Neighbourhood effects that impact wellbeing and opportunities;
- Diversion of income towards housing costs rather than upskilling; and
- Depressed business investment and captive employment.

Recommendations

The report provides five policy recommendations to boost community housing supply and tackle Canada’s productivity problem:

Increase investment in community housing to boost productivity and Canada’s GDP.
Commit to stable and predictable funding, financing, and tax incentives to build new homes and equip community housing providers with the resources to renew or acquire existing units over a long horizon.
Provide dedicated funding for urban, rural, and northern Indigenous housing.
Improve collaboration across provincial governments, municipalities, and builders to tackle the housing crisis.
Support Canadian innovation that builds housing more quickly, sustainably, and affordably.