Big Canada home price spikes could be imminent unless supply improves: report

Canada could see significant increases in home prices by 2032 if current housing supply trends continue, according to a new study from Concordia University’s John Molson School of Business and private equity firm Equiton.

Led by Erkan Yönder, associate professor of finance and real estate, the research used artificial intelligence to analyze housing supply across four major cities: Toronto, Montreal, Vancouver and Calgary. The study, titled “Breaking Ground: AI-Driven Analysis of How Policy Reform Can Unleash Canadian Housing Supply,” explores the impact of regulatory policies, demographic shifts and construction costs on long-term housing completions and prices.

The research follows Canada Mortgage and Housing Corporation (CMHC) projections that an additional 3.5 million housing units are needed by 2030 to meet rising demand. Using neural network AI, Yönder and his team processed data from CMHC, Statistics Canada and federal forecasts to simulate various supply scenarios.

The findings indicate that, without intervention, median home prices could reach $800,000 in Montreal, $1.8 million in Toronto and $2.8 million in Vancouver by 2032. In contrast, doubling current housing completions in Toronto and Vancouver could reduce median prices to $1.6 million and $2.5 million, respectively.

The study also measured the effect of regulatory changes. A 10% decrease in building restrictions could raise housing completions by nearly 10%, while a 10% cut in approval delays could increase completions by an additional 3%. Conversely, a 10% rise in input costs—covering materials, taxes, fees and labour—could reduce housing completions by 25% to 35%, with apartment-style projects most affected.

“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,” said Yönder. The AI tool provided what he described as a “comprehensive, dynamic view” of how both policy and global market conditions shape Canada’s housing markets.

City-specific results varied. In Montreal, price growth continues regardless of supply due to low completions relative to demand. In Calgary, housing prices are more responsive to population changes than supply levels.

Christopher Wein, COO of Equiton Developments, said the AI platform enabled forecasting that had not been previously available, calling it useful for identifying opportunities and managing risks.

The study concludes that regulatory reform, cost stabilization and multi-level collaboration are necessary but insufficient. Challenges such as skilled labor shortages and construction timelines remain. Yönder suggested that diversifying growth beyond Canada’s largest cities may be necessary to address long-term housing needs.

CMP

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