From the Fraser Institute

By Jake Fuss and Austin Thompson

A trade war, Trump’s threats to Canada’s sovereignty, and global economic volatility loomed large in the recent federal election. Yet many voters remained focused on an issue much closer to home: housing affordability.

In 2023, under Justin Trudeau, Canada added a record high 1.2 million new residents—more than double the previous record in 2019—and another 951,000 new residents last year. All told, Canada’s population has grown by about 3 million people since 2022—roughly matching the total population increase during the entire decade of the 1990s. Not surprisingly, homebuilding has failed to keep pace. In fact, housing construction rates have barely exceeded 1970s levels, even though the population has more than tripled since then. The result—a historic surge in housing costs.

On the campaign trail, the Liberals set an immigration target of about 400,000 per year, which is lower than the recent record highs but still high by historical standards, and tabled a plan they claim will double Canada’s residential construction rate to 500,000 new homes per year within a decade. But is it a good plan? And can the Liberals deliver it?

First, the good news. To help boost private homebuilding, the Carney government promised to introduce tax incentives including a rental building allowance, which would help reduce the tax bill on new multi-unit rental buildings, and a GST exemption for some first-time homebuyers, which may reduce the cost of newly-built homes and spur more homebuilding. The government also plans to expand the “Housing Accelerator Fund,” which offers federal dollars to municipalities in exchange for more flexible municipal building rules, and modernize the federal building code, which could shorten construction timelines. While much will depend on execution, these policies rightly aim to make it faster, cheaper and more attractive for the private sector to build homes.

Now, the bad news. The Carney government plans to create a new federal entity called Build Canada Homes (BCH) to “get the government back in the business of building.” According to Carney’s vision, the BCH will act “as a developer to build affordable housing” and provide more than “$25 billion in financing” to homebuilders and “$10 billion in low-cost financing and capital” for homebuilders to build “affordable” homes.

We’ve seen a similar movie before. In 2017, the Trudeau government created the Canada Infrastructure Bank (CIB) to invest in the “next generation of infrastructure Canadians need.” Since then, the CIB has approved approximately $13.2 billion in investments across 76 projects (as of July 2024), yet only two CIB-funded projects had been completed, prompting the authors of a multi-party House of Commons committee report to recommend abolishing the CIB.

The bureaucrats who will run the BCH won’t have the private sector’s expertise in housing development, nor the same incentives to keep costs down. BCH’s mandate is already muddled by competing goals—it must deliver “affordable” homes while simultaneously prioritizing certain building materials (e.g. Canadian softwood lumber), which could increase building costs.

The plan for BCH’s multi-billion-dollar loan portfolio includes significant “low cost” (that is, taxpayer subsidized) financing, a huge bet on prefabricated homebuilding, and no certainty about who will be on the hook for any failed projects—combined, this represents a major increase in costs and risks for taxpayers at a time when they already shoulder rising federal deficits and debt.

There’s also a real risk that BCH will simply divert limited investment dollars and construction resources away from private homebuilding—where projects respond to the needs of Canadian homebuyers and renters—and toward government-backed housing projects shaped by political goals. Instead of boosting overall homebuilding, BCH may simply reshuffle limited resources. And, as noted by the government, there’s a severe shortage of skilled construction labour in Canada.

It’s hard to see how Carney’s housing plan would double the pace of homebuilding in Canada—a very ambitious target that would require not only prudent housing policies but greater domestic savings, an implausibly large expansion in the construction workforce (which grew by only 18.4 per cent over the last decade), and the political fortitude to endure vocal opposition to housing development in certain neighbourhoods and on public lands.

Canada’s housing crisis will benefit from federal leadership—but not federal overreach. Rather than overpromising what it can’t deliver, the Carney government should refocus on what it’s best positioned to do: reform incentives, streamline regulations, and nudge municipalities and provinces to remove constraints on homebuilding. Trying to also act as a housing developer and lender is a far riskier approach.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute

From the Fraser Institute

By Tegan Hill and Austin Thompson

In 2024, construction started on 47,827 housing units—the most since 48,336 units in 2007 when population growth was less than half of what it was in 2024.

Alberta has long been viewed as an oasis in Canada’s overheated housing market—a refuge for Canadians priced out of high-cost centres such as Vancouver and Toronto. But the oasis is starting to dry up. House prices and rents in the province have spiked by about one-third since the start of the pandemic. According to a recent Maru poll, more than 70 per cent of Calgarians and Edmontonians doubt they will ever be able to afford a home in their city. Which raises the question: how much longer can this go on?

Alberta’s housing affordability problem reflects a simple reality—not enough homes have been built to accommodate the province’s growing population. The result? More Albertans competing for the same homes and rental units, pushing prices higher.

Population growth has always been volatile in Alberta, but the recent surge, fuelled by record levels of immigration, is unprecedented. Alberta has set new population growth records every year since 2022, culminating in the largest-ever increase of 186,704 new residents in 2024—nearly 70 per cent more than the largest pre-pandemic increase in 2013.

Homebuilding has increased, but not enough to keep pace with the rise in population. In 2024, construction started on 47,827 housing units—the most since 48,336 units in 2007 when population growth was less than half of what it was in 2024.

Moreover, from 1972 to 2019, Alberta added 2.1 new residents (on average) for every housing unit started compared to 3.9 new residents for every housing unit started in 2024. Put differently, today nearly twice as many new residents are potentially competing for each new home compared to historical norms.

While Alberta attracts more Canadians from other provinces than any other province, federal immigration and residency policies drive Alberta’s population growth. So while the provincial government has little control over its population growth, provincial and municipal governments can affect the pace of homebuilding.

For example, recent provincial amendments to the city charters in Calgary and Edmonton have helped standardize building codes, which should minimize cost and complexity for builders who operate across different jurisdictions. Municipal zoning reforms in Calgary, Edmonton and Red Deer have made it easier to build higher-density housing, and Lethbridge and Medicine Hat may soon follow suit. These changes should make it easier and faster to build homes, helping Alberta maintain some of the least restrictive building rules and quickest approval timelines in Canada.

There is, however, room for improvement. Policymakers at both the provincial and municipal level should streamline rules for building, reduce regulatory uncertainty and development costs, and shorten timelines for permit approvals. Calgary, for instance, imposes fees on developers to fund a wide array of public infrastructure—including roads, sewers, libraries, even buses—while Edmonton currently only imposes fees to fund the construction of new firehalls.

It’s difficult to say how long Alberta’s housing affordability woes will endure, but the situation is unlikely to improve unless homebuilding increases, spurred by government policies that facilitate more development.

Tegan Hill

Director, Alberta Policy, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute