Commentary
By Austin Thompson
and Steven Globerman

In many parts of Canada, the housing affordability crisis continues with no end in sight. And many Canadians, priced out of the housing market or struggling to afford rent increases, are left wondering how much longer this will continue.

Too few housing units are being built for the country’s rapidly growing population, which has exploded due to record-high levels of immigration and the federal government’s residency policies.

As noted in a new study published by the Fraser Institute, the country added an all-time high 1.2 million new residents in 2023—more than double the previous record in 2019—and another 951,000 new residents in 2024. Altogether, Canada’s population has grown by about 3 million people since 2022, roughly matching the total population increase during the 1990s.

Meanwhile, homebuilding isn’t keeping up. In 2024, construction started on roughly 245,000 new housing units nationwide, down from a recent peak of 272,000 in 2021. By contrast, in the 1970s, construction started on more than 240,000 housing units (on average) per year, when Canada’s population grew by approximately 280,000 people annually.

In fact, between 1972 and 2019, Canada’s population increased by 1.8 residents for every new housing unit started,d compared to 3.9 new residents in 2024. In other words, Canada must now house more than twice as many new residents per new housing unit as it did during the five decades prior to the pandemic. And of course, housing follows the laws of supply and demand—when a lot more prospective buyers and renters chase a limited supply of new homes, prices increase.

This key insight should guide the policy responses from all levels of government.

For example, the next federal government—whoever that may be—should avoid policies that merely fuel housing demand, such as home savings accounts. And provincial governments (including in Ontario and British Columbia) should scrap any policies that discourage new housing supply,y such as rent controls, which reduce incentives to build rental housing. At the municipal level, governments across the country should ensure that permit approval timelines and building fees do not discourage builders from breaking ground. Increasing housing supply is, however, only part of the solution. The next federal government should craft immigration and residency policies so population growth doesn’t overwhelm the available housing supply, driving up costs for Canadians.

It's hard to predict how long Canada’s housing affordability crisis will last. But without more homebuilding, slower population growth, or both, there’s little reason to expect affordability woes to subside anytime soon.

Austin Thompson is a Senior Policy Analyst at the Fraser Institute. Steven Globerman Is a Senior Fellow and Addington Chair in Measurement at the Fraser Institute.