Housing in Canada operates as a continuum, ranging from social and supportive housing to rental housing to market-rate homeownership. Each segment directly impacts the others. When one part breaks down, pressure builds across the entire system.
Canada’s housing affordability challenges cannot be solved by focusing on just one part of the system. Canada’s last National Housing Strategy focused almost exclusively on non-market social and subsidized housing—as the time comes to update the strategy, it is critical that the full continuum be addressed, with permanent policy measures to do so.
The federal government’s Build Canada Homes program is intended to support much-needed non-market housing. That is an important piece of the puzzle, but it is only one piece. In fact, Build Canada Homes is expected to deliver less than 1% of the roughly 500,000 homes per year needed to restore affordability. 95% of Canadians live in market-rate housing, for rental or for ownership. Much has been done for rental in recent times, which is good. More focus is now needed on homeownership, where the vast majority of Canadians still aspire to live.
Recent federal action, including the $1.7B in funding for provinces and territories to put toward measures that support housing supply and affordability for homeownership, for example to help eliminate the HST in Ontario, and funding to support infrastructure and reduce development charges, are a step in the right direction. But much more is needed.
Improving access to homeownership puts less pressure on the rental market and social housing
The deterioration of market-rate housing affordability has forced many well-qualified buyers out of the ownership market. Restrictive mortgage policies, increasing construction costs, and excessive taxes have made it increasingly difficult for Canadians to buy homes. As a result, more households remain in rental housing longer than they otherwise would.
This creates a domino effect:
- Homeownership becomes more difficult to achieve → more people rent for longer
- Rental demand increases → rents rise and availability declines
- More people struggle to find homes they can afford to rent → pressure shifts to social housing
In other words, when homeownership – which has traditionally provided Canadians with economic and social stability – falters, the rental market absorbs the shock. And when the rental market strains, the social housing system becomes overwhelmed.
There is also a severe housing shortage. CMHC estimates that we need to double housing starts for a decade to make up that shortfall, and that 75% of those homes need to be built for ownership to make it happen.
Ensuring that homeownership is not accessible only to the wealthy is good for everyone.
Why supply matters across all segments
Research from the Canada Mortgage and Housing Corporation (CMHC) reinforces the importance of increasing supply across the entire housing system. Through the concept of “filtering,” new housing supply at the higher end of the market gradually frees up more affordable options over time as households move through the system.
This means that building more market-rate housing is not at odds with affordability; rather, it is essential to it. Without sufficient new supply at all price points, there is no movement through the system, and affordability stagnates or worsens.
Risks of narrow policy focus
While social housing investments are necessary, they cannot compensate for a lack of supply in the broader market.
If governments focus primarily on government-subsidized housing while overlooking the barriers facing market-rate construction, Canada will:
- Fail to reach its housing supply targets.
- See continued upward pressure on rental housing.
- Further limit access to homeownership.
- Increase strain on already overburdened social housing systems.
Simply put, Canada cannot fix affordability at the supportive end of the continuum without addressing challenges at the ownership end too.
Canadians understand the gap
Public opinion research from Abacus Data shows that Canadians are looking for the whole housing continuum to be supported: 78% believe the federal government must do much more beyond Build Canada Homes to address market housing affordability, and they’re looking for a comprehensive strategy that restores balance across the entire housing system.
Path forward
To restore affordability, housing policy must:
- Support market-rate housing supply, including homes for ownership.
- Reduce government-imposed costs that drive up home prices, including sales taxes (GST/PST/HST) and development taxes.
- Fix mortgage policies that are making it unduly challenging to buy a home.
- Invest in housing supportive infrastructure.
- Remove municipal barriers and red tape delaying or stopping more supply.
- Avoid adding more costs through codes and regulations.
- Supporting housing affordability and supply through renovation measures.
- Address labour shortages by growing the domestic workforce, updating the immigration system, and supporting increased productivity.
- Continue investing in social and rental housing as well as market-rate housing supply for ownership.
Non-market housing and market housing are not an either/or choice. Canada needs both robust social housing programs and a healthy, functioning market-rate housing sector to help restore affordability for all.
A full-continuum approach – one that recognizes how each part of the housing system interacts – is the only path forward. Until policy reflects that reality, affordability will remain out of reach for too many Canadians. The update of the National Housing Strategy is a critical opportunity to do so.
Read more about CHBA’s recommendations to the federal government on how to improve market-rate housing affordability here.