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Economy

Housing policy should focus on closing the demand-supply gap, not inducing demand or stifling supply

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13 minute read

From the Fraser Institute

FEDERAL REFORMS TO IMPROVE HOUSING AFFORDABILITY

BY JOSEF FILIPOWICZ AND STEVE LAFLEUR

Canada’s declining housing affordability reflects a large, worsening imbalance between housing demand and housing supply.

Few policy areas are gaining as much attention in Canada as housing. This is unsurprising, given that Canada has the largest gap between homes prices and incomes among G7 nations (OECD, 2023) and rents continue to rise in most cities (Statistics Canada, 2023a). As eroding housing affordability has expanded to more parts of Canada, demands for policy solutions have grown beyond local jurisdictions, pressuring federal decisionmakers to act.

First, this essay offers a diagnosis of the issue—a large, growing imbalance between housing demand and supply. Second, it discusses federal policies affecting housing demand, urging better coordination and restraint amid tight supply conditions. Third, it discusses the federal government’s less-direct—though still important—options to improve housing supply.

Guiding principles: do no more harm, and close the demand-supply gap

Canada’s declining housing affordability reflects a large, worsening imbalance between housing demand and housing supply. This is evident when comparing trends in population growth and housing completions. Figure 1 charts these two metrics between 1972 and 2022. In recent years, Canada’s population growth has accelerated, while the number of homes completed has declined relative to the 1970s. 1

Policy efforts should focus on closing the demand-supply gap. The federal government should first ensure that it is not exacerbating the problem, either by stoking demand or by stifling supply, and second by both reviewing all existing policies through a supply-demand lens while implementing tailored policies aimed at closing the demand-supply gap.

Demand-side considerations for federal housing policy

Though all levels of government influence both housing demand and supply, the federal government’s policy levers pertain more directly to demand. They do so in two important ways.

First, federal policy influences population growth. As Canada’s birth rate has declined, population growth has been driven primarily by immigration (including both permanent and temporary residents) (Statistics Canada, 2023c). Though provinces may influence immigration decisions, the federal government establishes annual targets (where applicable) and admission criteria (Filipowicz and Lafleur, 2023).

Second, the federal government influences households’ ability to pay for housing. Policies for home buyers including the First-Time Home Buyers’ Tax Credit and the First Home Savings Account, which, combined with the Home Buyers’ Plan, enable the accumulation of tax-free savings for a down payment. Federal policies for homeowners include the exemption from capital gains taxation on the sale of primary residences, loan insurance through the Canada Mortgage and Housing Corporation, and residential mortgage underwriting through the Office of the Superintendent of Financial Institutions. Combined, these policies influence the relative attractiveness of housing as an investment.

Without adequate supply, these policies result in higher prices, rather than greater affordability. The federal government should review all existing or proposed policies directly or indirectly impacting housing demand. Further, it should adopt the following two policy approaches:

• Stronger consideration of housing supply dynamics when determining short, medium and long-term immigration targets or visa issuance. For example, supply metrics (e.g. housing starts, completions, and rental vacancy rates) should help inform multi-year plans or criteria for permanent and non-permanent resident admissions.

• Refraining from introducing new demand-inducing subsidies, such as tax credits or subsidies to homebuyers and homeowners, while comprehensively reviewing the impact of existing subsidies.

Supply-side considerations for federal housing policy

Housing supply in Canada is influenced primarily by provincial and local governments. Decisions concerning land-use and growth planning—including for lands owned by the federal government—largely rest with these levels of government, meaning housing construction projects cannot be realized without first aligning with, and receiving approval from, local authorities. Federal policies aiming to grow the housing supply must account for this.

Federal influence on housing supply can be divided into four policy types. First are fiscal transfers. Every year the federal government transfers billions of dollars to municipalities to fund infrastructure. In some cases, funding is permanent and based on federal-provincial agreements.3 In other cases, funding is negotiated for specific projects.4

Second, the federal government also funds the development of non-market housing. Programs such as the National Co-Investment Fund and Rapid Housing Initiative offer low-interest or forgivable loans, and direct funding, respectively, to organizations building or acquiring non-market housing.

Third, federal tax policies and programs influence the financial feasibility of homebuilding. For example, federal sales and capital gains taxes apply differently to different housing types, such as condominiums, rental buildings and accessory dwelling units (e.g. basement or laneway suites).5
Further, federal programs such as the Rental Construction Financing Initiative and multi-unit mortgage loan insurance products influence project feasibility by providing rental builders with low-interest loans or reduced premiums.

Fourth, the federal government’s primary responsibility for immigration gives it significant influence over the mix of skills prioritized in application screening, affecting the construction sector’s ability to recruit workers. Indeed, the share of immigrants working in the construction sector was lower than that among Canada’s overall population in 2020 (BuildForce Canada, 2020), reflecting the longstanding selection preferences of federal immigration policy until more recent changes.6

The federal government should coordinate with local and provincial governments as it develops policies, avoiding the creation of additional barriers and duplication. Specifically, the following three approaches should inform federal efforts to improve housing supply:

• Tying all federal infrastructure funding to housing supply metrics such as housing stock growth, starts or completions, ensuring limited funds are directed to those regions facing the strongest growth pressures in a transparent fashion, while reducing administrative costs and jurisdictional overlap.

• Reviewing and reforming the tax treatment of all housing development, helping improve the feasibility of large- and small-scale projects Canada-wide.

• Further prioritizing skills related to homebuilding in immigration policies and eligibility criteria.

Conclusion

Faced with a widening gap between housing demand and supply, this essay focuses on the federal government’s influence on housing markets, offering five areas of policy action.

The most direct federal levers pertain to housing demand. Housing constraints should be weighed more heavily when setting immigration policy, including temporary immigration, and new demand-inducing policies such as homebuyer tax credits should be avoided, while existing policies should be reviewed.

Given the federal government’s less direct influence on housing supply, intergovernmental coordination is recommended. Limited transfer funding should follow local housing supply metrics, while the tax treatment of housing development could also be reformed, enabling a larger number of projects to be financially feasible.  Lastly, immigration policies should emphasize skills required to build more housing.

Notes
1 For more on the gap between population growth and housing completions, see Filipowicz (2023).
2 For a full list of incentives and rebates for homebuyers, see <https://www.cmhc-schl.gc.ca/consumers/home-buying/government-of-canada-programs-to-support-homebuyers>, as of February 5, 2023.
3 For example, the Canada Community-Building Fund (formerly the Gas Tax Fund) delivers approximately $2 billion annually to local governments.
It is governed by a series of federal-provincial agreements.
4 For example, the federal government has committed one-third of the capital funding required by the Surrey Langley SkyTrain. Similar agreements
are common for major transit infrastructure.
5 The federal government recently announced the removal of the goods and services tax on purpose-built rental housing, helping the feasibility
of this housing class. For more on the influence of federal taxation on rental housing, see Canadian Home Builders’ Association (2016).
6 Immigration, Refugees and Citizenship Canada changed screening processes in mid-2023, favouring trade occupations, among others. The full effects of these changes will become apparent with time.
Sources for Figure 1
Statistics Canada, 2023a, table: 17-10-0009-01; Statistics Canada, 2023b, table: 34-10-0126-01.
References
BuildForce Canada (2020). Immigration Trends in the Canadian Construction Sector. <https://www.buildforce.ca/system/files/documents/Immigration_trends_Canadian_construction_sector.pdf> as of September 13, 2023.
Canadian Home Builders’ Association (2016). Encouraging Construction and Retention of Purpose-Built Rental Housing in Canada: Analysis of Federal Tax Policy Options. <https://www.evergreen.ca/downloads/pdfs/HousingActionLab/HAL_EncouragingConstructionAndRetention_FINAL.pdf> as of September 13, 2023.
Filipowicz (2023). Canada’s Growing Housing Gap: Comparing Population Growth and Housing Completions in Canada, 1972–2022.
Fraser Institute. <https://www.fraserinstitute.org/sites/default/files/canadas-growing-housing-gap-1972-2022.pdf>, as of February
5, 2024.
Filipowicz, Josef and Steve Lafleur (2023a). Getting Our Houses in Order: How a Lack of Intergovernmental Policy Coordination
Undermines Housing Affordability in Canada. Macdonald-Laurier Institute. <https://macdonaldlaurier.ca/getting-our-houses-in-order-how-a-lack-of-intergovernmental-policy-coordination-undermines-housing-affordability-in-canada/>, as of February 5, 2024.
Immigration, Refugees and Citizenship Canada (2023). Express Entry Rounds of Invitations: Category-based Selection. <https://www.
canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/express-entry/submit-profile/rounds-invitations/category-based-selection.html>, as of September 15, 2023.
International Monetary Fund (2023). Report for the 2023 Article IV Consultation. [or Country Report: Canada]. <https://www.imf.
org/en/Publications/CR/Issues/2023/07/27/Canada-2023-Article-IV-Consultation-Press-Release-and-Staff-Report-537072> as of
September 13, 2023.
Organisation for Economic Cooperation and Development [OECD]. 2023. Housing Prices (indicator). DOI: 10.1787/63008438.
OECD. <https://data.oecd.org/price/housing-prices.htm>, as of February 5, 2023.
Statistics Canada (2023a). Table 34-10-0133-01. Canada Mortgage and Housing Corporation, average rents for areas with a population of 10,000 and over. <https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3410013301>, as of February 5, 2023.
Statistics Canada (2023b). Table 34-10-0127-01. Canada Mortgage and Housing Corporation, vacancy rates, apartment structures of six units and over, privately initiated in census metropolitan areas. <https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410012701>, as of February 5, 2024.
Statistics Canada (2023c). Table 17-10-0008-01. Estimates of the components of demographic growth, annual. <https://www150.
statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000801>, as of March 2, 2023.

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Alberta

Alberta’s grand bargain with Canada includes a new pipeline to Prince Rupert

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From Resource Now

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Alberta renews call for West Coast oil pipeline amid shifting federal, geopolitical dynamics.

Just six months ago, talk of resurrecting some version of the Northern Gateway pipeline would have been unthinkable. But with the election of Donald Trump in the U.S. and Mark Carney in Canada, it’s now thinkable.

In fact, Alberta Premier Danielle Smith seems to be making Northern Gateway 2.0 a top priority and a condition for Alberta staying within the Canadian confederation and supporting Mark Carney’s vision of making Canada an Energy superpower. Thanks to Donald Trump threatening Canadian sovereignty and its economy, there has been a noticeable zeitgeist shift in Canada. There is growing support for the idea of leveraging Canada’s natural resources and diversifying export markets to make it less vulnerable to an unpredictable southern neighbour.

“I think the world has changed dramatically since Donald Trump got elected in November,” Smith said at a keynote address Wednesday at the Global Energy Show Canada in Calgary. “I think that’s changed the national conversation.” Smith said she has been encouraged by the tack Carney has taken since being elected Prime Minister, and hopes to see real action from Ottawa in the coming months to address what Smith said is serious encumbrances to Alberta’s oil sector, including Bill C-69, an oil and gas emissions cap and a West Coast tanker oil ban. “I’m going to give him some time to work with us and I’m going to be optimistic,” Smith said. Removing the West Coast moratorium on oil tankers would be the first step needed to building a new oil pipeline line from Alberta to Prince Rupert. “We cannot build a pipeline to the west coast if there is a tanker ban,” Smith said. The next step would be getting First Nations on board. “Indigenous peoples have been shut out of the energy economy for generations, and we are now putting them at the heart of it,” Smith said.

Alberta currently produces about 4.3 million barrels of oil per day. Had the Northern Gateway, Keystone XL and Energy East pipelines been built, Alberta could now be producing and exporting an additional 2.5 million barrels of oil per day. The original Northern Gateway Pipeline — killed outright by the Justin Trudeau government — would have terminated in Kitimat. Smith is now talking about a pipeline that would terminate in Prince Rupert. This may obviate some of the concerns that Kitimat posed with oil tankers negotiating Douglas Channel, and their potential impacts on the marine environment.

One of the biggest hurdles to a pipeline to Prince Rupert may be B.C. Premier David Eby. The B.C. NDP government has a history of opposing oil pipelines with tooth and nail. Asked in a fireside chat by Peter Mansbridge how she would get around the B.C. problem, Smith confidently said: “I’ll convince David Eby.”

“I’m sensitive to the issues that were raised before,” she added. One of those concerns was emissions. But the Alberta government and oil industry has struck a grand bargain with Ottawa: pipelines for emissions abatement through carbon capture and storage.

The industry and government propose multi-billion investments in CCUS. The Pathways Alliance project alone represents an investment of $10 to $20 billion. Smith noted that there is no economic value in pumping CO2 underground. It only becomes economically viable if the tradeoff is greater production and export capacity for Alberta oil. “If you couple it with a million-barrel-per-day pipeline, well that allows you $20 billion worth of revenue year after year,” she said. “All of a sudden a $20 billion cost to have to decarbonize, it looks a lot more attractive when you have a new source of revenue.” When asked about the Prince Rupert pipeline proposal, Eby has responded that there is currently no proponent, and that it is therefore a bridge to cross when there is actually a proposal. “I think what I’ve heard Premier Eby say is that there is no project and no proponent,” Smith said. “Well, that’s my job. There will be soon.  “We’re working very hard on being able to get industry players to realize this time may be different.” “We’re working on getting a proponent and route.”

At a number of sessions during the conference, Mansbridge has repeatedly asked speakers about the Alberta secession movement, and whether it might scare off investment capital. Alberta has been using the threat of secession as a threat if Ottawa does not address some of the province’s long-standing grievances. Smith said she hopes Carney takes it seriously. “I hope the prime minister doesn’t want to test it,” Smith said during a scrum with reporters. “I take it seriously. I have never seen separatist sentiment be as high as it is now. “I’ve also seen it dissipate when Ottawa addresses the concerns Alberta has.” She added that, if Carney wants a true nation-building project to fast-track, she can’t think of a better one than a new West Coast pipeline. “I can’t imagine that there will be another project on the national list that will generate as much revenue, as much GDP, as many high paying jobs as a bitumen pipeline to the coast.”

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Business

Carney’s European pivot could quietly reshape Canada’s sovereignty

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This article supplied by Troy Media.

Troy Media By Isidoros Karderinis

Canadians must consider how closer EU ties could erode national control and economic sovereignty

As Prime Minister Mark Carney attempts to deepen Canada’s relationship with the European Union and other supranational institutions, Canadians should be asking a hard question: how much of our national independence are we prepared to give away? If you want a glimpse of what happens when a country loses control over its currency, trade and democratic accountability, you need only look to Bulgaria.

On June 8, 2025, thousands of Bulgarians took to the streets in front of the country’s National Bank. Their message was clear: they want to keep the lev and stop the forced adoption of the euro, scheduled for Jan. 1, 2026.

Bulgaria, a southeastern European country and EU member since 2007, is preparing to join the eurozone—a bloc of 20 countries that share the euro as a common currency. The move would bind Bulgaria to the economic decisions of the European Central Bank, replacing its national currency with one managed from Brussels and Frankfurt.

The protest movement is a vivid example of the tensions that arise when national identity collides with centralized policy-making. It was organized by Vazrazdane, a nationalist, eurosceptic political party that has gained support by opposing what it sees as the erosion of Bulgarian sovereignty through European integration. Similar demonstrations took place in cities across the country.

At the heart of the unrest is a call for democratic accountability. Vazrazdane leader Konstantin Kostadinov appealed directly to EU leaders, arguing that Bulgarians should not be forced into the eurozone without a public vote. He noted that in Italy, referendums on the euro were allowed with support from less than one per cent of citizens, while in Bulgaria, more than 10 per cent calling for a referendum have been ignored.

Protesters warned that abandoning the lev without a public vote would amount to a betrayal of democracy. “If there is no lev, there is no Bulgaria,” some chanted. For them, the lev is not just a currency: it is a symbol of national independence.

Their fears are not unfounded. Across the eurozone, several countries have experienced higher prices and reduced purchasing power after adopting the euro. The loss of domestic control over monetary policy has led to economic decisions being dictated from afar. Inflation, declining living standards and external dependency are real concerns.

Canada is not Bulgaria. But it is not immune to the same dynamics. Through trade agreements, regulatory convergence and global commitments, Canada has already surrendered meaningful control over its economy and borders. Canadians rarely debate these trade-offs publicly, and almost never vote on them directly.

Carney, a former central banker with deep ties to global finance, has made clear his intention to align more closely with the European Union on economic and security matters. While partnership is not inherently wrong, it must come with strong democratic oversight. Canadians should not allow fundamental shifts in sovereignty to be handed off quietly to international bodies or technocratic elites.

What’s happening in Bulgaria is not just about the euro—it’s about a people demanding the right to chart their own course. Canadians should take note. Sovereignty is not lost in one dramatic act. It erodes incrementally: through treaties we don’t read, agreements we don’t question, and decisions made without our consent.

If democracy and national control still matter to Canadians, they would do well to pay attention.

Isidoros Karderinis was born in Athens, Greece. He is a journalist, foreign press correspondent, economist, novelist and poet. He is accredited by the Greek Ministry of Foreign Affairs as a foreign press correspondent and has built a distinguished career in journalism and literature.

Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.

 

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