If there is one thing all Canadian politicians supposedly agree on, it’s that we badly need new housing development all across the country. Ridiculous immigration numbers for much of the past decade is one key reason, as well as the fact that increases in taxes, development charges and other fees and levies imposed by municipal and other levels of government along with market uncertainties have discouraged developers from building new homes.
A report in late 2024 from the Canadian Centre for Economic Analysis found that in Ontario, the total government tax and fee burden amounted to 36 per cent of the purchase price of a new home. This was an increase of 16 per cent since 2021. The main factor driving this hike was sizeable increases in development charges at the municipal level. As most of the total fee and tax burden is fixed, a drop in house prices ends up squeezing the profit margins of builders.
This reduces incentives for builders until home prices increase once again. The fact the housing market has been relatively flat for the last few years means builders aren’t keen to build. The portion of the final home purchase price taken by government is four times that of what a builder realizes. Overall, the tax burden on housing is more than twice as much as the tax burden imposed on the rest of the economy. Basic rules of economics dictate that when something is taxed that excessively, the economy will produce less of it. Although politicians’ talk as if they want more housing built, their actions end up doing the exact opposite.
Recent statistics on new housing starts tell the tale. Data for Toronto show that housing starts in the city have fallen 60 per cent in 2025 to date relative to last year. Most analysts believe this is going to get worse in the next couple of years as the economy remains sluggish and governments show no signs of decreasing the fee and tax burden. Considering how dependent many municipal governments are on development revenue, this also means their revenue from development charges will plummet, with big negative implications for government budgets.
Nationally, housing starts have been sluggish for a number of years. In 2024, there was a 2 per cent increase in housing starts, largely driven by construction in the rental market. But in 2023 there was a 7 per cent drop in starts from 2022, so the slight 2024 increase didn’t make up for the previous year’s losses. The most recent record in housing starts took place in 2021 when there were 271,198. When we look historically at annual housing start data, the peak was in 1976 at 273,203. In 1976, Canada’s population was just over 23 million. The fact that housing starts were higher then than today when the population is almost double at over 40 million, indicates just how inadequate our housing development is today compared with half a century ago.
Federal housing promises by the Carney government are also delusional. Prime Minister Mark Carney has said his government will build 500,000 homes annually within a decade. This has been described by people actually in the homebuilding industry as “like turning the Titanic around.” Canada has never built so many homes annually, and likely never will in anything like a decade’s time. Furthermore, Carney has promised to create a new government entity called Build Canada Homes to act as a developer on housing projects and provide more than $25 billion in financing to innovative builders of prefabricated homes.
Wow – a new expensive bureaucracy and government entering into the building of homes. What could possibly go wrong? How can anyone believe this claptrap? It sounds a lot like the Trudeau approach when every policy announcement always created a new and costly government bureaucracy but never actually delivered anything except higher debt and more taxes for Canadians.
It should also be noted that ideology has played a role in the housing market, as leftist governments continue to want to increase density with condos and rental apartments instead of single-family dwellings. The problem is that most Canadians aspire to a single-family dwelling on enough land to have a backyard to enjoy with their children. The result is a serious mismatch of supply and demand. The lack of appropriate housing has had impacts far beyond the mere housing market itself, such as in the fact that young couples are delaying starting a family because they don’t want to raise children in a tiny condo in a downtown location.
Sadly, all of the facts indicate that Canada will continue to suffer a housing shortage for many years to come, despite the unrealistic and dishonest promises of politicians at all levels of government. Even though it is recognized that out-of-control immigration is one of the key reasons why housing demand exceeds supply, there is to date no indication that the federal Liberals plan to significantly cut back immigration anytime soon despite their claims to the contrary. As well, Carney surely knows that his recent electoral victory was dependent upon support from elderly baby boomers who already own overpriced real estate and would be greatly dismayed if a house building boom were to lower the value of their houses. Perhaps it’s time all Canadians became aware of the facts of our current housing market woes, and started to support governments that offer answers, not housing fantasies.
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.
