Removing trade restrictions between provinces could stimulate an increase of 30,000 new housing constructions, according to the Canada Mortgage and Housing Corporation (CMHC)
**Recent Analysis and Estimates**
According to the Canada Mortgage and Housing Corporation (CMHC), eliminating interprovincial trade barriers could increase housing starts by up to 30,000 units annually, bringing the total number of annual housing starts closer to 280,000[1][2][3]. This significant increase would represent a meaningful step towards addressing Canada's housing supply gap[1][2].
**Key Barriers Addressed**
The main obstacles faced by construction firms are distance, transportation costs, logistical challenges, and inconsistent provincial regulations[1][2]. A Statistics Canada survey found that nearly half of construction companies avoid sourcing goods or services from other provinces due to these factors, with 31.3% citing logistical issues and 18.1% highlighting high transportation costs[2]. Other barriers include provincial tax laws and regulatory fragmentation, which disrupt the domestic supply chain and prevent efficient movement of materials like lumber, steel, and aluminum across provincial borders[2].
**Mechanisms for Increased Housing Supply**
The CMHC suggests that reducing these barriers would allow construction firms to source materials from anywhere in Canada, increasing competition and potentially lowering costs[1][2]. Furthermore, addressing west-to-east transportation constraints would maximize the use of domestic materials nationwide[1]. The recent passage of Bill C-5, the Free Trade and Labour Mobility in Canada Act, reduces federal restrictions and speeds up permitting for large infrastructure projects, although provincial and municipal regulations remain a challenge[1][4].
**Potential and Limits of Policy Change**
While eliminating these barriers is projected to close about 15% of the housing supply gap needed to restore pre-pandemic affordability levels[2], experts caution that real-world impacts may be less dramatic than theoretical estimates. Historical experience with free trade agreements shows that simply lowering barriers does not automatically lead to increased trade flows, and entrenched interests may seek exemptions that limit the policy's effectiveness[4]. Additionally, the economic benefits may be modest compared to Canada's overall trading patterns, as interprovincial trade has declined as a share of total trade over recent decades[4].
**Summary Table**
| Barrier Addressed | Projected Impact on Housing Starts | Notes | |----------------------------|------------------------------------|--------------------------------------------| | Logistical & Transport Costs| +30,000 units annually | Cuts supply chain inefficiencies[1][2][3] | | Regulatory Fragmentation | Additional gains possible | Provincial cooperation still needed[1][4] | | Provincial Tax Laws | Minor impact | Less cited but still a factor[2] |
**Conclusion**
Eliminating interprovincial trade barriers is expected to significantly boost housing starts in Canada by improving the flow of materials, reducing costs, and streamlining regulations[1][2][3]. However, the full potential will only be realized if provinces align their rules and address remaining logistical challenges. While this is a positive step for housing supply and affordability, it is part of a broader set of measures needed to fully resolve Canada's housing crisis[1][2][4].
[1] CMHC Chief Economist Mathieu Laberge suggests reducing interprovincial constraints on west-to-east transportation infrastructure to maximize the use of domestic materials across the country. [2] The law dealing with red tape put up by the federal government; provinces have the most authority in eliminating interprovincial trade barriers. [3] The National Housing Agency estimates Canada could add 30,000 more housing starts annually by eliminating interprovincial trade barriers. [4] Prime Minister Mark Carney's government has passed Bill C-5, an omnibus bill that reduces federal restrictions on interprovincial trade and speeds up permitting for large infrastructure projects.
Investing in the real-estate sector could potentially yield higher returns due to the projected increase in housing starts, given the elimination of interprovincial trade barriers. This improvement in the economy, facilitated by finance policies, is anticipated to bring about a significant boost in business activities, particularly in the construction industry.
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