Eliminating interprovincial trade barriers would add 30K annual housing starts: CMHC

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A new analysis by the national housing agency estimates Canada could add 30,000 more housing starts annually by eliminating interprovincial trade barriers.

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That would push the total number of annual housing starts close to 280,000 over time, which would represent a “meaningful step towards fixing Canada’s housing supply gap,” said a report released Thursday by Canada Mortgage and Housing Corp.

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CMHC chief economist Mathieu Laberge said that in order to achieve this, Canada must reduce interprovincial constraints holding back west-to-east transportation infrastructure, which would help maximize the use of domestic materials across the country.

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He said fewer interprovincial trade barriers would strengthen the economy in several ways by driving up demand for home ownership, including through a stronger overall economy, a lower unemployment rate and higher household incomes.

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“Since increased income is expected to increase demand for home ownership, housing supply must increase to at least match the increase in demand in order to maintain or improve affordability,” Laberge wrote.

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“It is also expected that the average rent will go up 3.1 per cent, about half the increase in incomes. Rental housing market affordability will improve since incomes will be growing faster than rents.”

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The report’s projections would represent close to 15 per cent of the additional housing supply needed annually over the next decade to return to pre-pandemic affordability levels, according to recent CMHC estimates.

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Last month, CMHC said up to 4.8 million new homes will need to be built over the next decade to restore affordability levels last seen in 2019 based on projected demand. That would mean between 430,000 and 480,000 new housing units are needed per year across the ownership and rental markets by 2035 — around double the current pace of home construction in Canada.

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CMHC projects an average of 245,000 starts annually over the next 10 years under current conditions.

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Eliminating interprovincial trade barriers was a focal point of Prime Minister Mark Carney’s campaign during the spring federal election, when he vowed to create “free trade by Canada Day.”

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His government has since passed Bill C-5, an omnibus bill that reduces federal restrictions on interprovincial trade while speeding up permitting for large infrastructure projects.

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Experts have said that law is only the first step of the process as it deals with red tape put up by the federal government, rather than rules set by the provinces, which have the most authority in this area.

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The Canadian Federation of Independent Business has estimated that existing internal trade hurdles cost the economy some $200 billion a year.

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Laberge cited a survey by Statistics Canada showing close to half of Canadian construction firms blame distance and transportation costs as the main reasons for not purchasing goods or services from suppliers in another province or territory.

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They also say provincial or territorial tax laws are part of the problem, in addition to difficulties obtaining permits and licenses, among other challenges.

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Laberge’s report said Canada has “ample domestic production” of core construction resources, noting it is a net exporter of materials such as wood, aluminum, iron and steel.

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“That means the country doesn’t use all that it produces, and a significant share of our domestic production could be redirected towards residential construction in Canada,” he said.

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This report by The Canadian Press was first published July 17, 2025.

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