From the Fraser Institute

By Steven Globerman and Austin Thompson

Homebuilding in Canada has not kept pace with population growth and the resulting housing shortage is driving up housing costs, fuelling concerns about affordability. One widely proposed solution to Canada’s housing supply challenge—championed by the national housing agency, provincial and municipal policymakers, and the construction industry—is to increase housing density, typically by building more multi-unit homes in existing urban areas.

Data on new housing construction (“housing starts”) demonstrate that a shift towards multi-unit housing is already well underway. The first chart below shows the changing composition of national housing starts since 1955 (the earliest year of data), distinguishing between single-detached homes and “multiples”—a category that includes semi-detached homes, row homes, and apartments.

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Single-detached homes comprised the majority of housing starts in the 1950s and again in the 1980s and 1990s. Since the early 2000s, however, new housing construction in Canada has shifted decisively towards multiples. By the 2008/09 Global Financial Crisis, more multiples were being built than single-detached homes. And by 2024, multiples accounted for 77.8 per cent of housing starts in Canada. In other words, nearly four out of every five new homes started last year were part of a multi-unit housing development—a record-high share.

This national trend has been broadly mirrored across all 10 provinces. The second chart contrasts multiples’ share of overall housing starts in 1955 and 2024 for each province. In 2024, multiples accounted for a majority of housing starts in every province other than Newfoundland and Labrador.

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Housing densification is being driven by several factors. Demand for urban housing is high—economic opportunities are concentrated in Canada’s major cities, and the share of Canadians living in these urban centres continues to grow. At the same time, developable land in Canada’s major urban centres is increasingly scarce and expensive. In response, multi-unit housing offers a relatively affordable way to expand housing supply in cities.

Denser housing also reflects shifting demographics: as household sizes shrink and more people live alone or in pairs, multi-unit housing options may better suit Canadians’ evolving needs. Moreover, government policies—including zoning reform, financial incentives, and efforts to preserve farmland and environmental reserves—actively encourage denser building. This trend is not unique to Canada—housing densification is also taking place in comparable countries. Looking ahead, multiples are forecast to outpace single-detached homes in new construction for the foreseeable future.

The record-high share of multiples in Canada’s housing starts signals a major shift, but it will take time before this trend meaningfully affects overall housing stock. That’s because new construction, while significant, is small relative to the total number of existing homes. For example, in 2023 construction began on 240,267 new homes nationwide—equivalent to roughly 1.4 per cent of the estimated 17.1 million existing housing units. Single-detached homes still accounted for more than half of Canada’s overall housing stock as of the 2021 census.

These data should inform debates about housing density.

Canadians generally support new housing construction, but they are notably less enthusiastic when it comes to denser housing developments in established neighbourhoods—citing concerns about issues such as privacy, parking, and noise. These worries deserve attention, especially since housing densification is often concentrated in specific neighbourhoods. Thoughtful policy choices in building design, bylaw enforcement, and the provision of local infrastructure can help to mitigate legitimate concerns. However, some fears about greater density may be overstated. Canadian cities remain less dense than many comparable cities abroad and the evidence suggests that greater population density is compatible with a relatively high quality of life.

Getting the politics of density right is crucial to addressing Canada’s housing challenges. The country is not building enough homes and increasing housing density is an effective way to boost supply. Greater housing density is especially important in the context of shrinking household sizes. With fewer people living in each home, neighbourhoods that resist building more and denser housing risk slowly losing population, which can threaten the viability of local businesses, schools and services—undermining the very community character that opponents of redevelopment often seek to preserve.

As Canada continues to grapple with housing affordability challenges, a clear understanding of densification—its pace, drivers and trade-offs—will be essential to crafting balanced and effective housing solutions.

From the Fraser Institute

By Tegan Hill and Austin Thompson

Albertans make outsized contributions to the rest of Canada in many areas including federal tax revenue (helping fund programs such as equalization), Canada Pension Plan contributions, and job creation. But Alberta also leads the way on another front—housing construction.

To understand Canada’s housing affordability crisis, simply consult the law of supply and demand. Too few homes are being built for Canada’s surging population, which has been fuelled by record-setting levels of immigration. In response, the Carney government has promised to double the rate of homebuilding in Canada by 2035.

But is that realistic?

To achieve that feat, homebuilding in Canada must increase by an annual average rate of 6.5 per cent over the next 10 years. But according to new housing data, construction on new homes in Canada increased by only 3.5 per cent in the first half of 2025 compared to the same period last year. The national figure was weighted down by sharp declines in Ontario (-24.8 per cent) and British Columbia (-8.2 per cent), reflecting steep drops in Toronto (-44.2 per cent) and Vancouver (-10.6 per cent).

Meanwhile in Alberta, in the first half of 2025, construction started on 27,902 new homes—an increase of 29.7 per cent over the same period last year—with sizeable gains in both Edmonton (28.6 per cent) and Calgary (31.6 per cent). In fact, if not for the increase in homebuilding in Alberta, national housing starts would have fallen by 2.2 per cent rather than increasing by 3.5 per cent.

Not surprisingly, In recent years Alberta has welcomed tens of thousands of residents from other provinces due in part to relatively affordable housing. And when Canadians move to Alberta, they ease pressure on the overheated housing markets they leave behind. While Alberta still has housing challenges—supply hasn’t kept pace with Alberta’s population boom—the province is trending in the right direction, something that can’t be said for many other parts of the country.

But Alberta can’t solve the national housing crisis on its own. Consider that 6,392 more housing starts were added in Alberta in the first half of this year compared to the same period last year. Meanwhile, Toronto alone saw housing starts drop by 9,954—more than wiping out Alberta’s gains.

Clearly, homebuilding in Alberta is a source of strength for the province and the country. But areas of the country struggling to build enough homes would do well to emulate Alberta’s success, which rests in part on comparatively low municipal fees on builders, faster approvals by city hall for new housing projects, and more relaxed rules regarding what can be built and where. For its part, Alberta and its municipalities should double down on these policies to maintain the province’s housing advantage.

Alberta is setting the pace on housing construction. It should keep building—and the rest of Canada should catch up.

Tegan Hill

Director, Alberta Policy, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute