The federal government wants to build 480,000 homes a year over the next decade to restore housing affordability to pre-pandemic levels. That’s double our normal rate and a pace not seen since World War 2.
They’ve put some money and resources behind the effort: along with the new federal agency Build Canada Homes, Budget 2025 included other measures to ramp up activity such as a fund only accessible to provinces that lower construction-related taxes.
But the federal government’s own estimates—in a June report by the Canada Mortgage and Housing Corporation—show that, even if they’re able to pull it off, buying a home will be less affordable for nearly half the country by 2035.
As the report shows, house prices are expected to rise almost everywhere, even with all the new construction. But the real question is whether they’ll become more affordable, which depends on both the cost of a house and residents’ incomes.
The report itself doesn’t provide a specific affordability metric. But it does project three things—house prices, population, and GDP—which can be used to infer affordability. From this, we can estimate how much each province’s economy is expected to grow per person (i.e., GDP per capita). While not perfect, this serves as a good proxy for likely income growth, which can then be compared against the projected rise in home prices.
Based on these estimates, regions that currently have the greatest affordability advantage are set to see the biggest declines. Saskatchewan has it the toughest, with affordability dropping by over 40%. Outside Alberta’s biggest cities, housing is projected to become about 31% less affordable. Even currently affordable Edmonton will see a decline, but less pronounced.
Interestingly, one of the least affordable markets will become even less so: Toronto. There, house prices are projected to grow faster than incomes, at 20% compared to 13%. While that might not sound big, it means monthly mortgage payments on an average home will be hundreds of dollars more than they are right now.
There are some places where housing will become more affordable. These include Calgary, Montreal, and even Vancouver. This is thanks to slower house price growth, as well as rising incomes.
But if incomes don’t rise as much as the federal government thinks they will, affordability will worsen for even more of the country. The report projects GDP per capita growth of 13% over the next decade, which is ambitious given Canada’s record of 2.2% in the decade prior. If anything like this historic trend continues, more places will get dragged into the red: Calgary, Montreal, New Brunswick, Vancouver, and the rest of BC.
Likewise, if Canada can’t build housing quick enough, everywhere will be far less affordable even with the optimistic income growth projection.
Given the hype and hopes over this big push on housing, the numbers in this report are disappointing. More housing and rising incomes will help, but, as it stands, we may need even more of both than we realize.
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