HOUSING starts have struggled to keep pace with growing populations in some of Canada's largest cities, particularly Toronto, making affordability a "significant challenge", the national housing agency said on Tuesday (May 3).

Toronto, Montreal and Ottawa have the lowest levels of residential construction per capita, the Canada Mortgage and Housing Corporation (CMHC) said in the first of a series of reports on housing supply trends in the country.

Despite having the highest overall volume of housing starts in 2021, Toronto's gap between new construction and population growth is worsening, the national housing agency said.

"The biggest issue affecting housing affordability in Canada is that supply isn't keeping pace with demand. Simply put, Canada is facing a housing shortage," the CMHC said in a media release.

Home prices in Canada have more than doubled since 2015, making housing unaffordable to people in many large cities, though the crisis is most acute in Toronto and Vancouver.

Canada's population rose to 37 million people in 2021, up 5.2 per cent from 2016, driven mostly by immigration, according to official data released in February, with the downtowns and distant suburbs of large cities seeing the strongest growth.

Toronto, Canada's largest city, lags Montreal and Vancouver in rental housing starts, the CMHC said, adding to its affordability challenges.

While housing starts in Montreal and Ottawa have not kept pace with population growth, the affordability issues are not of the same scale as in Toronto, suggesting factors like the type of housing being built and regulations play a role, CMHC said.

In addition to increasing housing supply, diversity of new housing stock in terms of size and style is needed to meet Canada's housing needs, the agency said.

Apartments dominate housing construction in Canada's 3 largest cities, while ground level starts remain strong in Calgary, Edmonton and Ottawa. REUTERS