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Canada’s Unaffordable Housing Market

Canada’s housing problem has emerged as a national issue of concern. For decades, housing prices have outpaced wage growth, and as a consequence, both buying and renting a house has become unaffordable to an increasing number of Canadians. According to a May 2021 research by Oxford Economics, houses in Canada are 34% more costly than the typical income family can buy (Natalie). The survey also found that, among the 25 cities evaluated in North America, Hamilton Vancouver and Toronto, and are the most unaffordable. Additionally, the average price of homes in Canada increased by over 30% during the beginning of the pandemic—but affordability was already out of reach for most people prior to the COVID-19 pandemic. The following are some of the areas I feel are noteworthy in regard to Canada’s housing affordability crisis.

What Led To The Current Housing Crisis?

Canada had a housing system that prioritized the most vulnerable citizens. Between the mid-1960s and early 1970s, the government established a nationwide social housing supply program centered on non-profit and cooperative housing. The country started creating nearly 20,000 non-market residential units annually —houses that are not subject to market pressures and continues to be affordable for purchase or rent. Estimated 550,000 non-market social housing units had been constructed by the 1990s (Natalie). However, the federal government ceased supporting new social housing after then, and the obligation for alleviating housing needs was devolved to the provincial government and, in some regions, municipalities. This left most of Canada’s housing system totally in the hands of the private sector because of a lack of provincial and municipal financing. Once the government began to withdrawing from the housing market, the responsibility was transferred to private homeowners. Thus, it became an individual’s responsibility for being unable to afford housing.

When Justin Trudeau launched the National Housing Strategy (NHS) in 2017, he reasserted some control over housing. This plan committed the federal government to spend $70 billion on housing during the next decade through a series of initiatives headed by the Canada Mortgage and Housing Corporation (CMHC) (Natalie). The National Housing Strategy Act was signed into law in 2019 by the government, making housing a fundamental human right. However, there has been some evidence that low-income housing funding is decreasing, while new construction investment has fallen short of expectations (Natalie). There were also findings that just 63,300 new housing units were built by the federal government from 2017. It is anticipated that unless more financing is granted, the number of families in need of improved housing will grow by 1.8 million in the future years.

Another issue that I feel is important to address in relation to housing unaffordability in Canada is the factors contributing to housing unaffordability.

The Vicious Circle of Unaffordable Housing

According to proponents, the rising housing price in Canada is the consequence of a scarcity of low-priced rentals in major cities. The majority of city rentals are exorbitantly priced and operated by the private owners who are just interested in making a profit. This has compelled low-income people to flee cities and their employment to seek more cheap accommodation in rural regions (Caitlin). Housing costs in rural regions also grow as a result of the inflow of people from cities. This then presents another difficulty, as many who flee cities in search of a lower cost of living find themselves confronted with similarly high costs. The high costs in these towns subsequently spread and impact inhabitants in surrounding impoverished areas, who now face price rises as well.

Increased Foreign Investors

Foreign investors are another factor that contributes to the long-term increase in home prices. These investors possess substantial funds to invest in real estate, which they will later flip more profit. This intensifies competitiveness among local inhabitants, who must now contend with tremendous riches emanating from outside their nation (Bell). Not to mention that these wealthy investors may acquire all of the less costly housing alternatives, removing them from the market for residents who cannot afford the remaining more expensive ones. This mentality leads purchasers to believe they must offer more money and do so faster to outbid the competition.

The Canadian Real Estate Boom

Real estate’s recent surge is another factor contributing to the lack of affordable homes in Canada. Price increases are inversely proportional to fast growth in big cities, which is followed by an increase in demand for real estates. As demand grows, the price rises as well (Bell). The problem has been compounded further by people from other countries who want to migrate to Canada or make real estate investments in the country. Price increases have been fueled by foreign direct investment in the real estate industry, and the predicted influx of immigrants over the next few years will likely increase demand for rental homes.


Immigration is another issue that has arisen due to the increasing real estate market. There are many immigrants in Canada, just as there are in the US. Canada is home to thousands of people who came to the nation searching for a better life. It is unknown how much immigration contributes to Canada’s growth in housing values. However, housing markets react to household demand. This would imply that population growth would also need rises in housing markets.

Low-Interest Rates

Since the early 1990s, mortgage rates have been gradually declining. Along with a scarcity of available home alternatives, the latter results in intense bidding wars amongst interested parties. Home values throughout Canada, especially in the Greater Toronto Area, are rising (Bell). The cost of living in Canada is at its highest level, a situation that has lasted two years. More individuals qualify for reduced mortgage rates with low-interest rates, attracting more purchasers. As a consequence, sellers increase the price of their properties.

From Home to Vacation Destination

It is well-known that Canada is home to hundreds of scenic spots that make excellent holiday destinations for both Canadians and international visitors. However, although this is excellent for the Canadian tourism economy, the financial strain on people who have lived in these areas for years is only increasing. Popularity always results in a rise in the expense of living.

Clearly, Canada has many obstacles to settle to reestablish equilibrium and ensure house affordability. While several housing alternatives are accessible at the upper end of the income spectrum, those on the lower end of the income spectrum may hardly afford to keep a roof over their heads, specifically, people who need social housing. Consequently, home affordability is almost non-existent for a large proportion of Canadians. Thus, there should be more pricing flexibility and a rethinking of Canada’s entire housing policy. While this issue seems persistent with the market always changing and the nation developing new prospects and solutions to fulfill Canada’s housing need, there is reason to believe that the country can tackle this problem with the proper efforts.

Work cited

Bell R, Webster. “Why Are Houses So Expensive in Canada?” New Canadian Life 2021

Caitlin Wood. “Affordable Housing Crisis in Canada.” 8, Dec. 2021,

Natalie Michie. “Canada’s In A Housing Crisis. Here’s How Each Party Is Promising To Address It.” Chatelaine 9 Sep.2021,


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