Internal federal documents made public this week lay out a bleak assessment of Canada’s housing market as the government readies a new agency to speed construction.
The briefing materials, prepared in May for incoming Housing and Infrastructure Minister Gregor Robertson, say high housing costs are weighing on the economy and making it harder for people to find a place to live.
The binder stresses that lower income households and other vulnerable groups are shouldering the worst of the strain because suitable, affordable options remain scarce.
It also notes that many middle-income Canadians are staying in rentals longer, adding pressure to vacancy rates and rents.
Officials tie the squeeze to population growth that has outpaced other G7 countries in recent years, compounding local pressures on housing and services.
The documents add that the government’s moves to moderate population growth should temper demand, which in turn is expected to lift rental vacancies in the coming years.
The materials include a market outlook that calls for home prices to rise faster in 2025 before growth eases over the following two years.
Housing starts are projected to slow this year, though they are still expected to sit above the 10-year average. Those forecasts draw on analyses from major banks, industry groups, and the national housing agency.
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Government figures in the binder show residential construction costs have climbed about 58 percent since 2020, with further upside risk tied to U.S. tariff uncertainty.
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Policymakers warn that cost inflation continues to undermine the economics of new projects, especially at the affordable end of the market where margins are thin and financing is more sensitive to rate moves.
The briefing notes that average nightly stays in homeless shelters rose roughly 43 percent between 2020 and 2023, and that people are spending longer in the system, a sign that exits to permanent housing are getting harder.
Subsidized supply remains a weak point; the documents say Canada has fallen behind on building homes offered at below-market rates, a gap that is landing hardest on newcomers and people with the lowest incomes.
Non-market housing makes up about 4 percent of Canada’s stock, versus an OECD average near 7 percent, according to figures cited in the binder.
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The materials also reference estimates from the federal housing advocate that institutional investors own 20 to 30 percent of the country’s purpose-built rental units, underscoring the growing role of financial players in the sector.
Ottawa’s policy response is set to expand, Prime Minister Mark Carney told Liberal caucus earlier this week that the government will launch a new Build Canada Homes agency in the coming days.
The initiative is intended to scale up affordable homebuilding, including on public land, and to push construction technologies that can lower costs and speed delivery.
The binder flags that Canada’s building sector has been slow to adopt new methods and materials, another obstacle to hitting ambitious supply targets.
The outlook in the documents points to a market that could stay tight through 2025, then cool as population growth slows and more rental units arrive.
For builders and housing providers, the paper’s emphasis on cost inflation and non-market gaps signals where policy may concentrate, from procurement and factory-built housing to supportive financing and partnerships with co-ops and non-profits.
The diagnosis is unambiguous: affordability is worsening, shelter usage is rising, and the current mix of homes is not meeting need. Whether a new agency and a suite of policy tools can bend those lines in 2026 and 2027 will hinge on execution, not just plans on paper.
