The housing crisis in Canada is not a recent development; it has been a persistent policy challenge addressed by various political parties. Yet, despite these efforts, Canada remains one of the only countries part of the Organization for Economic Cooperation and Development (OECD) with the highest house-price-to-income ratios. This persistent strain on the housing market has obscured deeper issues within the financing system, whose flaws have far-reaching consequences for renters, homeowners, and the development sector alike.
What is the Housing Crisis?
At the heart of the housing crisis is the imbalance between the supply of homes and the growing demand for affordable housing. By 2030, more than 40 per cent of the one million new households unable to buy a home will also struggle to afford market-rate rent. This will disproportionately affect low-income groups, newcomers, and young people.
A recent report by the Community Housing Transformation Center highlights that, even when housing is available, racialized newcomers often face barriers due to discriminatory treatment. Discrimination based on ethnicity is compounded by biases related to gender and family status, further limiting access to adequate housing. These challenges are exacerbated by rising rental prices, leaving many individuals with no choice but to live in substandard housing—often too small, poor in quality, or unsanitary. Such conditions make vulnerable populations more susceptible to health issues, financial instability, and violates their right to equality. Canada must not only expand its housing market but ensure that it meets adequate standards for all.
Roots of the Housing Crisis
Canada’s housing crisis is not uniquely a 21st-century issue. Since the 1980s, provincial governments have managed housing policy, but many struggled to adequately address growing needs, having previously relied on federal funding. The federal government’s withdrawal resulted in widespread project cancellations, leaving housing demands unaddressed. In response to mounting public pressure, the Trudeau government reintroduced federal involvement through the National Housing Strategy (NHS). This ambitious $115 billion plan has built and preserved over 500,000 units and aims to address the crisis on a national scale and provide oversight across all provinces.
While the NHS and renewed federal involvement mark progress, governments at all levels must confront the significant flaws in the housing finance system that create substantial barriers for developers. The current financing framework burdens projects with a wide range of fees, including application and permitting fees, development charges, parkland dedication costs, and community benefits charges. A report by Steve LaFleur from the Fraser Institute revealed that, across 16 GTA municipalities, these fees averaged $116,870 per low-rise unit and $79,140 per high-rise unit. These heavy costs have contributed to a slowdown in development, compounding the housing crisis even further.
Government Action
The current NHS falls short of adequately supporting the most marginalized groups, who are in need of affordable housing. While the current government has introduced policies, such as a $1.5 billion fund to protect affordable rentals, this is insufficient. Greater investment is needed in non-market housing options that are accessible to low-income, working, and middle-class individuals who cannot currently afford a home. This includes better subsidized-provided housing, private non-profit housing, and co-ops.
As public demand for homeownership continues to grow, housing is becoming an increasingly pressing issue. It has become a cross-partisan issue and will be pivotal in next year’s election, giving the Liberal government limited time to sway voter sentiment. Both the Liberal and Conservative housing plans adopt similar theoretical approaches. The Conservatives propose a GST rebate exclusively for rental units priced below market value, prioritizing affordable housing and appealing to lower and middle-income communities. In contrast, the Liberals apply the rebate more broadly, including to luxury rentals, a decision that risks missing the most vulnerable and exacerbating existing socioeconomic inequalities. However, with effective framing, the Liberals could present their approach as a comprehensive solution to the housing crisis, appealing to a wider range of voters.
Still, for either party to make lasting progress, they must address the significant fees imposed on developers. The Conservatives have taken initial steps by subsidizing taxes in 22 of the most unaffordable municipalities across Canada which may enhance their credibility, but much more still needs to be done to resolve the crisis.
Edited by Isabelle Monette
The opinions expressed in this article are solely those of the author and they do not reflect the position of the McGill Journal of Political Science or the Political Science Students’ Association.
Featured image by La Citta Vita