Rising construction costs will likely push up the tab for the federal government’s affordable housing initiatives, according to a report from the Office of the Parliamentary Budget Officer (PBO).

As it stands, Ottawa has carved out a budget of about $82 billion to cover the cost of its national housing strategy. But in a report released on Feb. 16, the PBO said more than $89 billion will be needed to accomplish its goal of bringing affordable housing units to Canadian residents.

“While federal spending to provide affordable housing and address homelessness has increased, so too has the cost of residential construction, reducing the real purchasing power of federal spending,” the report by PBO economists Carleigh Busby and Lisa Barkova said.

The national housing strategy, which was launched in 2017, was originally a 10-year plan that was expected to run through 2028 with a budget of $40 billion. Since then, the budget has doubled as the need for affordable housing has accelerated, though construction has not kept up.

New residential developments have become more expensive to build as a result of the rise in the cost of materials, land and loans.

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