Last Updated on October 24, 2023 by Richard Lyall
Canada Mortgage and Housing Corporation figure we must build 3.5 million more homes between now and 2030 to reach affordability. At the current pace, though, we will only build 2.3 million.
A report by RBC Economics estimates that immigration and other factors will result in the creation of 240,000 new households a year between now and 2024, but the industry has typically completed about 200,000 new homes a year. If you do the math, that’s roughly a 20-per-cent shortfall.
As Robert Hogue, assistant chief economist at RBC, noted in an interview, even if we were to build 240,000 homes for the next few years, we still wouldn’t be reducing the gap that has already built up.
It is abundantly clear that we are facing a critical shortage of housing and must find ways to bring more supply onstream quicker.
However, the task is not as easy as it sounds. You can’t just flick a switch and get more housing built. The present process involved in getting approvals and eventually building homes is time-consuming.
Even if the red tape is cut and the development approvals process is streamlined via a standardized and common digital e-permitting process, we must still figure out how to build faster.
In Ontario, the goal is to build 1.5 million homes in the next decade. To do that, we must significantly increase our capabilities. That means we will need more skilled trades and must move to off-site construction. The industry must evolve to include more modular and panelized construction.
Having a pre-engineered and pre-certified product reduces the build time on a site, cuts down on noise and dust during construction, and with less traffic on site, there is less disruption to the community.
Off-site construction allows panels and modules to be built year-round and weatherized in a controlled factory setting. With a panelized package, homes can be erected and enclosed quickly. There is also less waste, and the construction sites are safer due to fewer vehicles and trades on site.
Other countries have wholeheartedly embraced offsite manufacturing to solve their housing problems, most notably Sweden and Japan. If we could emulate their approach and make use of modern techniques that allow homes to be built faster and with fewer workers, it would help cut into the shortfall.
In Sweden, for example, prefabrication accounts for 84 per cent of the country’s residential construction market share. The country is widely regarded as the global leader in off-site modular construction.
A driver in Sweden’s move to off-site construction was the Scandinavian climate. Long winters, heavy snow, and frigid temperatures limit productivity when using traditional construction practices.
To boost housing, a country-wide, performance-based code was adopted that makes it easier for factories to build homes. They don’t have to change specs for every locality and can choose whatever structural system makes the most sense for their operation, as long as the final result passes a code check.
Companies like Lindbäcks Bygg also invested in automation and cutting-edge technology and assembly line robotics to produce over 25,000 square feet of turnkey housing per week. The company was an early adopter of automated technology, streamlined its production processes to increase capacity and productivity, and retrained its existing workforce to outcompete rival companies.
Lumber company Derome also entered the business and changed its business model to efficiently produce prefabricated building components.
In Japan, about 15 per cent of the country’s newly constructed homes are now manufactured off-site.
The trend to prefabrication started after the Second World War to solve a massive housing deficit. Initially, the prefabrication industry in Japan focused on cheap housing that could be built quickly.
The industry has evolved, though, and has reached new heights. The homes being built these days are of higher quality, have greater longevity, and must meet more stringent building requirements.
Sekisui Hiems, one of the largest prefabricated manufacturers in the world, operates many factories across the country, building 14,000 new homes each year – on assembly lines much like car manufacturing. To promote the strength of its products, the company produced a short video that shows an elephant standing on top of one of its frames – a testament to the evolution of prefabrication.
In the U.K., meanwhile, modular home builder BoKlok, jointly owned by IKEA and Skanska, teamed up with affordable housing provider VIVID in 2021 to deliver 1,000 modular homes over five years on sites in three communities.
When it comes to solving the housing supply crisis, there is no silver bullet. But other countries have shown how off-site construction can help. Perhaps we can learn from their example.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.
