Canadian developers are racing to reach the nation's housing goals as they say the federal government's policy to encourage immigration has contributed to record population growth.

In British Columbia, where population gains are among the highest in Canada, the construction labor force in Vancouver and other cities lacks the capacity to meet the building boom that will be required over the next decade to address the housing shortfall, according to developers.

The West Coast province that shares more than 420 miles of border with the United States must ramp up annual housing completions 25% to 43,000 a year for the next five years to keep up with a population surge across Canada that's driven mostly by the arrival of newcomers from other countries, according to a recent report by the British Columbia Real Estate Association.

Higher interest rates and weaker market conditions will make reaching that rate of completions difficult, the association said.

When British Columbia started construction on roughly 45,000 houses annually over the past two years, "the building industry was falling apart it was so busy," said Brad Jones, senior vice president of development at Vancouver-based Wesgroup Properties, during a panel discussion at the Vancouver Real Estate Forum earlier this year. "Engineers and architects were busy and cities couldn't keep up and you couldn't get the labor to build even at that level."

Canada will need to produce more than 3.5 million more homes by 2030, raising the total housing supply to about 22 million from the current pace of 18.6 million, to restore affordability in the country, according to a report by the Canada Mortgage and Housing Corp.

In British Columbia, that means the province will need to add 570,000 more houses by 2030, increasing its total supply to 3.21 million units above the current pace of 2.64 million, according to the Canada Mortgage and Housing report.

"That's a terrifying number to look at," Jones said.

British Columbia's population increased 2.8% to an estimated 5.4 million in 2022, marking the highest annual growth rate since 1996, according to the federal government.

Canada's population was more than 39.5 million at the start of 2023 as the country added than 1 million new arrivals for 2.7% growth last year, data from Statistics Canada showed. It was the first time in Canadian history that annual population growth exceeded 1 million, pushing the annual growth rate to the highest level since 1957's 3.3%, according to the data.

While Canada’s population grew by 1 million last year and the government is looking to welcome 1.45 million immigrants over the next three years, just 240,600 housing starts were issued, noted Greg Ambrose, a rental housing broker with CBRE. British Columbia’s population grew by 2.5%, or 129,000, last year, including 78,000 in Vancouver.

"We’re in a full-blown crisis and it didn’t happen yesterday," said Mark Kenney, chief executive of Canadian Apartment Properties REIT. "Everybody in the world wants to live here and there’s never been a bigger stack of capital in the history of our county that wants to invest. It needs land and a good financial and regulatory environment."

Canada is already dealing with one of the largest housing shortages among the G7 nations and needs 3.5 million more houses on top of what is under construction to meet the demand — including 570,000 in British Columbia, Ambrose said.

That shortage is one reason Vancouver ranks third and Toronto ranks 10th among the world’s 20 least affordable cities, as measured by a ratio of median home price to household income, according to the most recent Demographica International Housing Affordability Survey, based on 2022 data.

Housing prices are still well above 2019 levels in Canada despite the price correction under way across the country, with Vancouver prices almost 19% above pre-pandemic levels. Homeownership requires an income of at least $160,000 in greater Vancouver, where the median income is $94,000.

Municipalities have not kept up with the infrastructure required to handle thousands of new houses and residents, Kenney said.

'We’re relying on our municipalities to build the service capacity to build the housing that we need," he said. "We’ve done nothing."

Elected officials in Greater Vancouver and British Columbia agree that slow and cumbersome city and provincial processes for approving housing and other projects need an overhaul.

They've promised that they will double down on efforts to streamline approval processes that can take up to eight years before construction can move forward.

"We are going to use every tool we have to identify land opportunities, partner with the private sector to build and remove as many impediments as we can to get the housing built,” said Ravi Kahlon, British Columbia’s newly elected minister of housing.

Addressing the issues will require a call of action on multiple fronts, Kenney said.

"We’ve got to be noisy and keep the noise up until we see swift action by all levels of government," Kenney added. "We have an affordability crisis and a supply crisis, we have to deal with both of those issues."