Canada’s Housing Crisis: Bold Plans, Big Challenges, and the Path Forward

Canada is at a critical juncture in addressing its housing crisis. With soaring home prices, lagging construction rates, and affordability slipping away for many Canadians, the federal government has unveiled what it calls the most ambitious housing plan in Canadian history. Yet, critics argue that there’s a substantial gap between promises and progress. Let’s break down the recent announcements and explore what needs to happen to make meaningful strides in solving Canada’s housing crisis.

New Federal Housing Initiatives: A Step in the Right Direction?

On November 19, 2024 Deputy Prime Minister Freeland announced new action to lower the cost of housing for Canadians. It outlines measures as part of its housing plan, aiming to make housing more affordable and accessible. This is on top of previously announced rate cuts and mortgage rule changes.

Here's a summary of the actions:

Cracking Down on Large Corporate Investors

Although the idea of corporations buying up homes in Canada has received some criticism, the government is taking steps to tackle the financialization of housing by launching consultations to restrict large corporate investors from purchasing single-family homes. The goal is to ensure regular Canadians aren’t outbid by corporations, keeping housing within reach for everyday buyers.

Removing GST on Student Residences

To ease rental pressures for students, the government plans to eliminate the GST on new student housing construction. This builds on the earlier removal of GST for purpose-built rental housing and incentivizes educational institutions to expand housing options.

Mortgage Reforms for More Flexibility

Starting November 21, 2024, mortgage holders will no longer face the stress test when renewing loans with a different lender, provided there are no changes to the loan amount or term. This change promotes competition among lenders, giving homeowners the opportunity to shop for better rates.

Unlocking Federal Lands for Housing Development

An additional 12 underused federal properties have been added to the Canada Public Land Bank, bringing the total to 83 properties, equivalent to 430 hectares. These lands are expected to yield 250,000 new homes by 2031, accelerating the pace of housing development.

Boosting Funding Through the Housing Accelerator Fund

Quebec municipalities will receive an additional $92 million, part of the federal-provincial partnership to support faster housing construction.

What’s Still Missing? A Call for Urgent Action

Despite these announcements, industry experts and critics highlight significant barriers that continue to stymie progress.

The Construction Gap

According to CMHC, Canada needs to build an additional 3.5 million homes by 2030 to restore affordability—requiring 500,000 new units annually. Current housing starts are falling well short, with Ontario projecting just 81,300 starts this year, far below the 150,000 needed to hit its 1.5 million target by 2031.

Runaway Costs and Red Tape

Government-imposed taxes, fees, and levies account for 31% of the cost of a new home in the GTA. Combined with bureaucratic hurdles, these costs significantly hinder developers’ ability to build at scale. Without addressing these systemic issues, even the most ambitious plans risk falling short.

Decline in High-Rise Developments

High-rise condos and apartments—critical for addressing urban housing needs—are seeing sharp declines in construction starts. Condo sales are down 81% below the 10-year average in Toronto, with fewer cranes on the skyline signaling trouble ahead.

The Workforce Crisis: Who Will Build the Homes?

The construction industry is facing a looming labor shortage as older workers retire. BuildForce Canada projects that 351,800 workers will be needed nationally by 2033 to meet demand and offset retirements.

Immigration as a Solution

While immigration has traditionally helped fill these gaps, recent federal announcements to reduce overall immigration may complicate matters. Industry leaders emphasize the need to prioritize skilled tradespeople over other categories of immigrants to support housing goals. Programs like Ontario’s Immigrant Nominee Program, which expanded to 21,500 nominations in 2024, aim to address these challenges.

What Needs to Be Done? Moving Beyond Talk

Experts argue that Canada needs a “war-time effort” to address the housing crisis. Here are key actions that must happen:

1. Reduce Government-Imposed Charges

Lowering taxes and fees on new housing will make it easier for builders to deliver affordable units, particularly in high-demand areas like the GTA.

2. Cut Red Tape

Streamlining approval processes for housing projects can significantly reduce delays and encourage more development.

3. Expand Skilled Worker Recruitment

Investing in domestic training programs and attracting skilled immigrants are essential to meeting workforce demands.

4. Increase Accountability

Governments at all levels must collaborate and deliver on their promises with measurable outcomes to avoid falling further behind housing targets.

Hope on the Horizon: A Resilient Industry

Despite the challenges, the residential construction industry remains resilient. Canada’s growing population ensures continued demand for housing, creating opportunities for recovery. By addressing systemic barriers and following through on initiatives, Canada has the potential to meet its ambitious housing goals and restore affordability for future generations.

Conclusion: Walking the Talk on Housing

Canada’s housing crisis requires more than just big announcements—it demands concrete actions and swift execution. With ambitious plans like the removal of GST on student residences, expanded mortgage flexibility, and unlocking federal lands, the government has laid a foundation. However, bridging the gap between housing needs and actual starts will require tackling bureaucracy, lowering costs, and ensuring the construction workforce is equipped for the challenge.

The path forward is clear: less talk, more action. Canada’s future depends on it.