Zown breaks down the new report from TD Economics on housing affordability.

A new report from TD Economics talks about the government's big plan to make housing more affordable. But there are some challenges that might make it hard for the plan to work.

The government wants to build a lot of new homes by 2031 - about 3.87 million of them. That's a huge goal, especially because it means building more homes than ever before.

But there are problems. One big problem is that interest rates are high, which makes it harder for people to buy homes. Plus, there aren't enough workers to build all these new homes. And even if they could be built, the plan might not do much to help people afford homes.

The report says that the government should be careful about trying to encourage more people to buy homes when homes are already too expensive for many. So, the things the government plans to do might not really change much about how many homes are sold.

One part of the plan might make it harder for investors to make money from renting out homes. This could mean fewer homes being built because investors won't want to invest in them.

On the bright side, the plan could make building homes more efficient. That's good news for the construction industry, which hasn't been very efficient in recent years.

But even with all this, there are still a lot of questions about whether the plan will work. Building so many homes every year is a huge challenge. Plus, the government needs help from other levels of government to make it happen.

There are also concerns from some provinces about the plan. For example, the money the government wants to spend on infrastructure needs to be shared with the provinces. And getting unused government land for building homes requires cooperation between different levels of government. Plus, even if the federal government updates the building rules, the provinces might not follow them because they have their own rules.

The bottom line is that the federal government’s housing plan is highly ambitious and should deliver at least some boost to housing supply, particularly in the purpose-built rental space. However, capacity constraints in the construction sector will limit the government’s ability to reach its lofty target for new homes. The coming years should provide an important litmus test for how well policies geared towards purpose-built housing can support rental construction. This is because population growth is expected to be much slower due to the federal government’s plan to lower non-permanent resident levels.?

Demand-side measures in the plan are unlikely to deliver game-changing market impacts. However, overall construction productivity could be enhanced through the plan. This would be good news for an industry where productivity has lagged for many years.??