Canada’s housing problems have been around for a few decades and have gotten much worse in recent years as out-of-control immigration has swamped Canada and the disincentives imposed by governments to housing developers pile up. Trends show no sign of improving anytime soon. A July 2026 report from the Canada Mortgage and Housing Corporation (CMHC), the federal government body overseeing the housing market, was decidedly pessimistic.
Because of expected slow economic growth – or virtually no economic growth – the CMHC expects demand to be low for housing. Other factors influencing this demand will be uncertainty caused by global events as well as the federal Liberals’ inability to reach a trade agreement with the U.S. The fact that interest rates remain relatively high will also be a consideration, although Canada’s interest rates continue to rank lower than many other countries and we have a weakening dollar to show for it.
The CMHC report also notes a number of regional differences. Higher commodity prices will help the Prairie provinces while trade risks will have a bigger negative impact on Central Canada. Although the CMHC believes overall economic growth will improve slightly in 2027, it still expects growth to be very modest. This aligns with the Bank of Canada’s forecasts of sluggish GDP growth in both 2027 and 2028. Canada’s growth has been weak for a number of years because of the continued kneecapping of our valuable fossil fuel and other resource industries, growing government size at federal, provincial and municipal levels, high rates of taxation and excessive intrusion of government into the private sector via burdensome regulation. Overall personal income growth has also been lacklustre, reducing consumer spending, which constitutes the majority of our GDP.
Low demand also means welcome price reductions in Canadian housing, but as overall confidence levels among Canadians are not high, there is still much reluctance to purchase housing at current prices. Only very slight improvements in demand are expected in the next few years. Prices also have not really come down that much to spur interest in potential buyers. Rental prices are also predicted to modify somewhat in the CMHC report, but not significantly.
In terms of housing starts, the CMHC report predicts a decline in starts from 259,028 in 2025 to 241,400 units in 2026 and a further decline to 223,400 units in 2027. You may recall back in the 2025 federal election, Mark Carney promised 500,000 housing starts annually for the next five years. The highest-ever number of housing starts in Canada on an annual basis was 273,203 back in 1976. Carney’s promise was absolutely ridiculous and has zero chance of ever being achieved, yet no legacy media ever question him on this absurd failed promise. Once again, Canadians are misinformed about a very important issue. Despite the reports from the federal government’s own entity, the CHMC, Carney has not revised his housing start forecasts in response.
Carney’s recent bailout of Vancouver condo developers also doesn’t send good signals as to the Liberals’ plans to boost the housing market in Canada. These developers, who make very good money when the market is strong, should never be bailed out when the opposite happens and values decline. That is reality for virtually all private sector businesses. The Vancouver condo developers should have reduced their prices sufficiently to attract buyers, not have taxpayers subsidize their business failures.
Other levels of government must also take responsibility for Canada’s housing crisis. Many government-imposed costs, such as development fees, land transfer taxes, community benefits fees, parkland fees, and others, have greatly added to the costs of building residential homes and apartments. When housing prices fall, it suddenly becomes uneconomic to invest in these projects as decent profit margins are no longer attainable. Inventories of vacant housing, notably condos in major cities, are also high and deter new construction.
As housing demand softens in the next few years because of poor economic growth, slow growth in incomes, government resistance to reducing taxes and fees and only modest reductions in housing prices, the outlook is pretty dismal for Canadians for the next few years. This is despite the fact that many Canadians still need housing but can’t afford it. It also puts a spotlight on the failure of all governments to enact policies to spur housing growth. Carney’s absolutely ridiculous promise to build 500,000 new housing units annually for the next five years also shows how dishonest he was, as anyone with a clue about housing data would know this was impossible. Sadly, all of the facts indicate that Canadians will be waiting for quite a long time for our housing market to reach reasonable balance and actually serve Canadian needs.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
