Canada's Real Estate Crisis: A Call for Policy Reform

Canada's real estate market is in turmoil. Home prices are at record highs, supply cannot meet demand, and government policies continue to exacerbate the crisis. Instead of making meaningful reforms, policymakers have prioritized excessive taxation, rapid immigration without infrastructure investment, and foreign aid over domestic business growth. These decisions have created an unsustainable housing market that is pricing Canadians out of homeownership and stifling commercial development. This article examines the root causes of these issues, using real data, statistics, and international comparisons to highlight what Canada must change.

Excessive Taxation vs. Incentivization

Canada’s taxation policies on real estate are among the most burdensome in the world, disincentivizing investment and increasing costs for homebuyers and businesses alike. The Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) add significant costs to new home sales, driving up prices by thousands of dollars per unit. Unlike in some countries where new housing developments are tax-exempt to encourage growth, Canadian policies make it more expensive to build homes. The 2024 budget increased the inclusion rate on capital gains from one-half to two-thirds for individuals earning over $250,000, further discouraging investment in real estate development (Fiera Real Estate, 2024). Additionally, the foreign buyers tax, now at 20% in British Columbia and Ontario, was intended to curb speculative purchasing but has instead discouraged foreign investment that could help fund housing supply.

The impact of these taxation policies is clear. In 2023, Canada's real estate sector reported profits of $50.4 billion, a 40% increase from pre-pandemic levels, indicating that high taxation is not making housing more affordable but rather making it more expensive for average Canadians (Tax Fairness, 2024). Developers, facing increased taxation and regulation, pass these costs onto consumers, pushing homeownership further out of reach for first-time buyers and the middle class. Countries like the United States encourage investment by offering tax incentives to homebuilders and property investors. For example, Trump's proposed “gold card” visa program offers residency for those investing in the housing market, fueling development (MarketWatch, 2025). Singapore also takes a strategic approach, implementing tax rebates and incentives for developers to build affordable housing while maintaining high taxation on speculative investments.

Immigration vs. Infrastructure Investment

Canada is experiencing one of the highest immigration rates in its history, with little regard for housing and infrastructure planning. As of January 1, 2024, Canada's population reached 40.77 million, increasing by 1.27 million people in a single year—the highest annual growth rate (+3.2%) since 1957 (Realting.com, 2024). Meanwhile, housing supply is only growing at 2.4% annually, meaning that demand is dramatically outpacing supply, leading to sky-high home prices and rental costs. Average monthly rent in Canada increased by 22% from 2022 to 2024, with major cities like Toronto and Vancouver seeing even greater increases (Reuters, 2024). As housing becomes increasingly unaffordable, immigration policies that fail to address housing shortages only make the crisis worse.

Infrastructure is also failing to keep pace with this rapid population growth. Public transit projects meant to ease housing density issues remain stalled. The Ontario Line subway project, originally set to open in 2027, has been delayed to 2031, with costs ballooning beyond $20 billion (Statistics Canada, 2024). Major highways, schools, and healthcare facilities are not being developed fast enough to support population growth, leading to overcrowding and worsening living conditions. Countries like Germany have successfully managed high immigration rates by maintaining a strict policy of synchronized immigration and infrastructure planning, ensuring housing availability keeps pace with population increases. Similarly, Australia requires developers to provide a proportionate amount of affordable housing in all new projects to prevent pricing issues. Canada must adopt a similar approach, ensuring that immigration policies are paired with comprehensive infrastructure development plans.

Foreign Aid vs. Domestic Business Development

While Canada sends billions overseas in foreign aid, domestic industries, including real estate and commercial development, remain underfunded. In 2023, Canada allocated $7.1 billion to foreign aid, while failing to provide similar levels of investment into housing development or business support (Government of Canada, 2023). Commercial real estate is struggling due to declining business investment, with office vacancy rates reaching 18.7% in Q4 2024—the highest in a decade (CBRE Canada, 2024). The federal government’s housing plan aims to build 3.5 million homes by 2030, but there is no clear funding strategy to make this happen (CMHC, 2024). Without meaningful investment, Canada will continue to struggle with housing shortages and economic stagnation.

Other countries prioritize domestic growth by offering economic incentives for investment. The United States has focused on economic expansion by providing tax breaks and funding grants to incentivize domestic development. Japan offers subsidies to businesses investing in commercial real estate and mixed-use developments, fostering economic resilience. Canada must shift its focus from international aid to domestic economic growth, ensuring that Canadian businesses and housing markets receive the investment they need to thrive.

A Clear Message to Politicians

Canada’s real estate and economic struggles are not due to external forces—they are the result of poor domestic policies and political inaction. If politicians truly wanted to fix these issues, they would reduce excessive taxation on homebuilders and property developers to lower housing costs. They would synchronize immigration with infrastructure investment to ensure enough housing and services exist to accommodate population growth. They would also prioritize domestic business incentives over foreign aid to boost Canada’s economy and job market. Without these changes, Canada will continue down an unsustainable path where homeownership is unattainable, commercial real estate collapses, and citizens struggle under rising costs. Policymakers must act now—before it is too late.

References

Fiera Real Estate. (2024). Canada's Housing Crisis: Fueling the Boom in Multi-Residential Real Estate. Retrieved from https://ca.fierarealestate.com/wp-content/uploads/2024/05/Fiera-Real-Estate-White-Paper-Canada-s-Housing-Crisis_Final.pdf

Tax Fairness. (2024). How Tax Breaks Are Worsening Canada's Housing Affordability Crisis. Retrieved from https://www.taxfairness.ca/en/resources/reports/how-tax-breaks-are-worsening-canadas-housing-affordability-crisis

MarketWatch. (2025). Why Trump's 'Gold Card' Visa Program Could Make the Pricey U.S. Housing Market Even More Expensive. Retrieved from https://www.marketwatch.com/story/why-trumps-gold-card-visa-program-could-make-the-pricey-u-s-housing-market-even-more-expensive-4fec6dcf

Realting.com. (2024). Canadian Real Estate Market Analysis: High Rates, Immigration and Housing Supply. Retrieved from https://realting.com/news/analysis-of-the-real-estate-market-in-canada

Reuters. (2024). Canada Faces Worsening Home Ownership Crisis with Stalled Condo Sales. Retrieved from https://www.reuters.com/markets/canada-faces-worsening-home-ownership-crisis-with-stalled-condo-sales-2024-10-30/

CBRE Canada. (2024). Canada Office Figures Q4 2024. Retrieved from https://www.cbre.ca/insights/figures/canada-office-figures-q4-2024

CMHC. (2024). Canada's Housing Supply Problem: Why Affordability is Getting Worse. Retrieved from https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2024/canada-housing-supply-affordability-crisis