The Housing Crisis (Canada)

Canada has the physical space, the timber, the labour force, and the capital to house its people, and it has failed to do so. Between the late 1990s and the 2020s, home prices in Vancouver, Toronto, and their surrounding regions rose far beyond local incomes, pushing ownership out of reach for a generation that did everything the country asked of it. Conservatives read this as a failure of government, not of markets: three decades of restricted land supply, permitting delays, levies loaded onto new construction, and a population target set without any matching plan to build.¹

The crisis is a supply problem with political parents. Every constraint that slowed construction was enacted by a legislature or a council, and each was defensible on its own terms. Their combined effect was to make building a home in the country’s largest cities slow, expensive, and legally uncertain.

Key Takeaways

• Canada Mortgage and Housing Corporation estimated in 2022 that roughly 3.5 million housing units beyond the projected pace of construction would be needed by 2030 to restore affordability.¹
• Population growth reached a record in 2023, with Statistics Canada estimating an increase of about 1.27 million people in a single year, against total housing starts running near 240,000 for the year.²
• Municipal development charges, zoning restricted to single-detached housing across most urban land, and multi-year approval timelines are the three levers governments control directly.
• The conservative remedy is supply-side: legalise construction, cut the per-unit government cost, and match immigration levels to the pace at which homes are actually completed.
• Demand-side measures — foreign buyer taxes in British Columbia from 2016 and the federal purchase ban from January 2023 — address a small share of transactions and leave the shortage intact.

History And Context

The federal government entered housing on a large scale after the Second World War. Central Mortgage and Housing Corporation began operations on 1 January 1946 to house returning servicemen, insure mortgages, and finance the suburban expansion of Canadian cities. For three post-war decades the arrangement worked: serviced land was plentiful, municipal approval was quick, and a single industrial wage bought a detached house on a lot.

Three changes broke the model. First, the federal government withdrew from social housing, ending new spending commitments in the 1993 budget and transferring administration of existing stock to the provinces over the following years. The non-market share of new construction collapsed and was never replaced. Second, provinces and municipalities tightened land use. Ontario’s Places to Grow Act, 2005 and the Greenbelt designation of the same year constrained outward growth in the Golden Horseshoe without a matching liberalisation of density inside the existing built-up area — most residential land in Toronto and Vancouver remained zoned exclusively for detached houses. Third, municipalities shifted the cost of infrastructure onto new construction through development charges, which in several Greater Toronto Area municipalities now exceed one hundred thousand dollars per unit before a shovel enters the ground.

Interest rates then did the rest. A quarter-century of falling borrowing costs capitalised into land prices, and the 2020-21 rate cuts produced the steepest run-up in Canadian history. When rates rose sharply in 2022, prices fell somewhat while monthly carrying costs rose, so affordability worsened on both sides of the transaction.

The Conservative Position

The conservative diagnosis begins with the price mechanism. Where supply cannot respond to demand, additional money chases a fixed stock of housing and lands entirely in the price of land. Thomas Sowell’s study of the American boom and bust made the point with local evidence: the metropolitan areas with the most severe price escalation were those with the most restrictive land-use regimes, and the places that let builders build stayed affordable through the same national credit conditions.³

That points to a specific programme. Legalise multiplex and mid-rise construction as of right across residential land. Put statutory time limits on approvals with deemed approval if a municipality misses them. Move infrastructure financing back onto general revenue or long-term debt rather than a levy on the newest household. Reform the trades apprenticeship pipeline. And set immigration to the number of homes the country can actually complete, which is a matter of arithmetic rather than sentiment about newcomers.

Conservatives add a second argument that is not economic. Roger Scruton held that people care for places they expect to keep, and that ownership converts a resident into a custodian.⁴ A country where the median young family cannot buy has severed the link between work, saving, and a settled home — the ordinary path by which people acquire a stake in the social order and a reason to defend it. The political consequences of that severance arrive later and last longer than any price index.

Differing Positions

The strongest opposing case holds that supply alone will not deliver affordability at the low end. Private builders construct for the market that can pay, and in a high-cost city that means units priced for professional incomes. On this view the withdrawal of federal social housing after 1993 is the decisive event, and the remedy is public and non-profit construction on public land, financed at government borrowing rates, alongside stronger tenant protection.

A second line argues that housing has been treated as an investment asset rather than shelter, and that tax treatment — the principal residence capital gains exemption, favourable treatment of rental portfolios — rewards holding property over producing it. Curbing speculative demand, on this account, does more than deregulating supply.

Conservatives answer that non-market construction still runs into the same zoning rules, the same approval queues, and the same shortage of trades, and that a government builder facing a five-year permit process builds no faster than a private one. The constraint is the permission to build. Until that changes, every other intervention distributes a shortage rather than ending it.

References

1. Canada Mortgage and Housing Corporation, Canada’s Housing Supply Shortages: Estimating What is Needed to Solve Canada’s Housing Affordability Crisis by 2030 (CMHC, 2022).
2. Statistics Canada, “Canada’s population estimates: Strong population growth in 2023,” The Daily, 27 March 2024.
3. Thomas Sowell, The Housing Boom and Bust (Basic Books, 2009).
4. Roger Scruton, Green Philosophy: How to Think Seriously About the Planet (Atlantic Books, 2012).