Housing prices particularly in places like Toronto and Vancouver are still a big issue and what is driving them is the subject of debate. There is Josh Gordon’s recent policy paper , which places the main emphasis on demand side factors and there is the recent story raising alarm on Toronto’s “housing bubble”. There are of course demand and supply side factors and the supply of new housing coming onto the market is a factor. So today’s post is going to do two things: first, add to the debate on housing supply as a driver of housing prices in Canada and second, celebrate Canada’s 150th by adding a long term time series on housing starts going all the way back to Confederation.

I decided it would be useful to see what housing starts have been like in Canada over the longer term and have several sources of data. I have three series from Historical Statistics of Canada, which provide total dwelling starts for 1949 to 1976 (Series S190-1), total dwelling starts for 1921 to 1950 (Series S198-2) and total dwelling starts (Series S203-2) for 1868 to 1920. There is overlap in these series and I imagine some differences in their coverage and construction but I use them to provide a series on total dwelling starts going from 1868 to 1954. By dwelling units, I mean not only single-detached homes but also semi-detached, row houses, apartments and multiple units. I use S203-2 for 1868 to 1920, S198-2 for 1921 to 1950 and S190-1 for 1951 to 1954. For the period 1955 to 2016, I use the total dwelling units starts from Statistics Canada (the site was working the day I went to get the data) Series v730579. I have provided a Table with the data at the end of the post.

Putting these series together generates Figure 1 and the results show periods of rise and decline. The wheat boom era from 1896 to 1913 certainly stands out showing an increase from 11,600 dwelling starts to peak at 76,300 in 1912 and then a drop. The peak of 1912 was not to be surpassed until 1948 when starts were 95,700. The period from the depths of the Great Depression until the mid 1970s was generally a period of increase and the largest annual number of dwelling starts was in 1976 at 273,203. The period since 1973 has generally been one of some decline with smaller peaks in 1987 (245,986 starts) and 2004 (233,431 starts).

Of course, Canada’s population has grown substantially since 1868 and what is more interesting is adjusting these numbers for population. These dwelling starts were converted into per capita starts using Statistics Canada population series v7422019 for 1868 to 1970 and v52154496 for 1971 to 2016. The year 1868 was set equal to 100 and a per capita index of total dwelling starts constructed and presented in Figure 2.

In per capita terms, the two great eras of growth in total dwelling starts are the wheat boom era from 1894 to 1910 which see the index grow from 57.5 to peak at 297 in 1910 and the post Great Depression era which starts in 1932 at an index value of 39.4 and then rises to peak at 310.5 in 1973. The period since 1973 has seen a decline in the value of the per capita index for housing starts.

Of course, I do not have any estimates for the total stock of housing but I would imagine the total stock has indeed grown fairly steadily. In terms of additions to Canada's housing stock however, the growth rate has slowed. Housing starts were growing faster relative to population before 1973 and since then there has been a moderation. To my mind, this could indeed be a factor in the long term rise in housing prices especially if the demand for housing is actually shifting right faster than supply.

DATA TABLE