The Canadian Housing Crisis: A Defining Issue for the 2025 Election
Introduction
Housing affordability has become one of the most pressing political and economic issues in Canada, with the crisis escalating over the past decade. Rising home prices, skyrocketing rental rates, and a lack of supply have pushed homeownership further out of reach for many Canadians, especially younger generations. As Canada approaches its federal election, housing policies have taken center stage, with political leaders making bold promises to tackle affordability and increase supply. This article explores the key challenges of the housing crisis, policy responses, and the implications for voters.
The State of the Canadian Housing Market
Affordability Crisis
Canada's housing market has witnessed a dramatic increase in prices, particularly in major urban centers like Toronto, Vancouver, and Montreal. As of 2025, the income required to afford a home in Toronto has reached a staggering $223,290¹. Affordability has worsened due to a combination of high interest rates, increased demand, and supply constraints.
A 2024 study by the Fraser Institute highlights that regulatory barriers, high development fees, and lengthy approval processes have significantly slowed down housing construction, exacerbating the supply shortage². Furthermore, the pandemic-driven housing boom saw home prices rise by over 50% in just a few years, creating an affordability crisis that has left many Canadians struggling to secure stable housing³.
Rental Market Pressures
The affordability crisis extends to the rental market as well. According to a recent report from Rentals.ca, the average rent for a one-bedroom apartment in Canada has reached $2,088¹. Despite some recent softening in rental prices, demand continues to outpace supply, forcing many renters to spend an increasing portion of their income on housing.
Key Issues Driving the Crisis
Interest Rates and Mortgage Costs
Canada's interest rate policies have played a significant role in shaping the housing market. In response to inflation, the Bank of Canada raised its benchmark rate to a 22-year high of 5% in July 2023, cooling the housing market but also making mortgages more expensive¹. While rates have since been cut to 2.75% as of March 2025, the effects of previous hikes continue to burden homeowners and potential buyers¹.
Housing Supply Shortages
A critical issue in the housing crisis is the persistent shortage of homes. Statistics Canada reports that in 2023, the country’s population increased by 1.27 million people, yet the housing supply failed to keep up⁴. Ontario alone needed 200,000 new homes to accommodate growth but managed to build only 82,000⁴.
The Canadian Mortgage and Housing Corporation (CMHC) has warned that housing starts in major cities like Toronto and Vancouver have declined sharply, with Toronto seeing a 68% drop in February 2025⁵. Without drastic changes in policy, the gap between housing demand and supply is expected to widen.
Barriers to New Construction
Developers face numerous challenges in building new homes, including:
High construction costs due to labor shortages and rising material prices⁶.
Lengthy approval processes and bureaucratic delays at the municipal level².
High development fees and taxes, which can add up to 36% of the total cost of a new home⁷.
Richard Lyall, President of the Residential Construction Council of Ontario, argues that government policies must focus on cutting red tape and incentivizing market-based housing development⁷.
Political Responses to the Crisis
With the federal election approaching, major party leaders have introduced policy proposals aimed at tackling the housing crisis.
Pierre Poilievre (Conservative Party)
GST Exemption: Proposes a full GST exemption on new home construction to reduce costs for buyers¹.
Reducing Bureaucracy: Plans to streamline housing approvals and promote high-density development in major cities¹.
Mark Carney (Liberal Party)
Affordable Housing Expansion: Pledges to build 500,000 new affordable housing units¹.
First-Time Homebuyer Incentives: Introduces additional tax rebates and grants for first-time homebuyers¹.
Despite these promises, critics argue that past government efforts, such as the 2017 National Housing Strategy, have fallen short in delivering meaningful change⁸. Many experts believe that without substantial reforms to zoning laws, land-use policies, and incentives for developers, housing affordability will remain an issue beyond the election.
The Future of Housing in Canada
Urban Sprawl vs. Smart Density
As cities expand outward, concerns about environmental degradation and inefficient land use have grown. Urban planners like Naama Blonder advocate for smart density—creating walkable, well-connected communities instead of encouraging sprawl⁹. However, opposition from municipal governments and local residents often slows down such initiatives.
Aging Population and Housing Needs
With Canada’s senior population increasing, the demand for senior-friendly housing is expected to rise significantly in the coming years¹⁰. Long-term care facilities and accessible housing options are crucial components of future housing policies, yet investment in these areas remains insufficient.
Immigration and Housing Demand
Canada’s high immigration targets, set at 500,000 newcomers annually from 2023 to 2025, have added pressure to an already strained housing market¹¹. While immigration is essential for economic growth, experts warn that without adequate planning, the influx of people will worsen affordability issues.
Conclusion
The 2025 federal election will be pivotal in shaping the future of housing in Canada. While political leaders have introduced various proposals, the effectiveness of these policies remains to be seen. Addressing the housing crisis requires a multi-faceted approach, including regulatory reforms, increased housing supply, and innovative urban planning strategies.
For Canadian voters, the housing crisis is more than just a political debate—it’s a fundamental issue that affects quality of life, financial stability, and economic growth. As election day approaches, Canadians must critically assess each party’s housing platform to determine which policies will offer real solutions to this ongoing crisis.
References
¹ Storeys. (2025). The Great Canadian Housing Crisis: Why It’s the Defining Election Issue. Retrieved from Storeys.com
² Lafleur, S. (2024). Barriers to Housing Supply in Ontario and the Greater Toronto Area. Fraser Institute. Retrieved from Fraser Institute
³ Bawuah, P. (2024). Can Ontario’s Housing Crisis Be Fixed? University of Windsor. Retrieved from U Windsor
⁴ Statistics Canada. (2024). Population Growth and Housing Supply Trends. Retrieved from StatCan
⁵ CMHC. (2025). Canadian Housing Starts Decline in Major Cities. Retrieved from CMHC
⁶ Zheng, S. & Shen, K. (2024). Report on Canadian Real Estate Development Challenges. MIT. Retrieved from MIT.edu
⁷ Parsan, S., & Kim, M. (2024). Housing Affordability and Government Policies. SSRN. Retrieved from SSRN
⁸ Rancourt, M. (2025). The Housing Crisis: The Unfulfilled Aspirations of the National Housing Strategy. Retrieved from Google Books
⁹ Blonder, N. (2024). Urban Planning and the Future of Housing in Canada. Retrieved from CBA
¹⁰ Snow, T. (2025). Housing Needs for Canada’s Aging Population. Retrieved from Bria Communities
¹¹ Bryant, T. & Shapcott, M. (2025). The State of Housing in Canada. Taylor & Francis. Retrieved from T&F
