With the Liberals securing a minority government, all eyes are now on Prime Minister Mark Carney and his high-stakes promise to solve Canada’s housing affordability crisis by ramping up construction to 500,000 homes annually.
Housing economists agree that while the ambition is necessary, the path forward is anything but simple. The Carney housing plan features a mix of quick fixes and long-haul structural reforms—some of which could take years to fully implement.
Quick Win: GST Cut for New Homes
One of Carney’s most immediate policy levers is a GST waiver on newly built homes. The plan exempts homes priced up to $1 million for first-time buyers, with a reduced GST rate on homes between $1 million and $1.5 million.
This change, experts say, could be legislated quickly once Parliament reconvenes. “You could pass legislation and have it come into force almost immediately,” said Steve Pomeroy, housing policy expert at McMaster University.
However, the impact may be limited. “It’s a drop in the bucket,” said Penelope Graham, mortgage analyst at Ratehub.ca. She noted that new home prices in markets like Toronto already hover near or above the million-dollar mark, which means affordability may remain out of reach for many.
Mortgage Market Reform on the Table
Carney also pledged to review Canada’s mortgage system, aiming to introduce longer-term options and broaden financing choices.
“Increasing mortgage flexibility is a step in the right direction,” said Graham. Currently, most Canadians opt for five-year fixed-rate mortgages, despite ten-year terms being available at some lenders. Expanding terms could help provide more stability in a volatile interest rate environment.
Biggest Challenge: Doubling Home Construction
The most ambitious part of the plan? Doubling the rate of homebuilding across the country. According to the Canada Mortgage and Housing Corporation (CMHC), Canada needs six million new homes by 2030 to restore affordability.
Carney’s solution includes establishing a new Crown agency—Build Canada Homes—tasked with financing, developing, and managing affordable housing projects at scale. The agency would work with private builders and municipalities to streamline projects and cut through red tape.
But creating such an agency won’t be quick. Pomeroy noted that during the post-WWII housing boom, CMHC operated with 96 regional offices and a full team of architects, engineers, and loan officers. “Recreating that kind of network today would take years, not months,” he said.
Prefab Housing: A Scalable Solution?
To accelerate timelines and address labour shortages, the Liberals are betting big on pre-fabricated housing. Prefab homes, built in factories and assembled on-site, require fewer workers and can be deployed faster—especially important as the construction industry faces a 1-million worker shortfall.
“It’s much easier to train workers for factory-line assembly than for traditional on-site construction,” said Pomeroy. He also pointed to improved safety and working conditions for labourers.
Carney’s plan includes investment in prefab technology, as well as a catalogue of pre-approved housing designs to speed up municipal permitting. The catalogue, released last month, includes templates for rowhouses, fourplexes, sixplexes, and accessory dwelling units, aimed at slashing approval wait times.
Workforce Remains a Critical Bottleneck
While the construction push is welcome, questions remain about who will build the homes. The Canadian Construction Association estimates a massive labour shortfall. Experts say Canada’s immigration system is not prioritizing the skilled trades needed to meet housing demand.
“We need to remove the bias in immigration points and focus more on applicants with trade skills,” said economist Tu Nguyen of RSM Canada. “We’re slowing immigration right when we need it most.”
Still, Nguyen emphasized the urgency of the plan. “Canada has under-built for nearly two decades, while the population has surged. The target is ambitious—but if executed well, it could be transformative.”
How Long Will It All Take?
While some pieces—like the GST cut—could be enacted within weeks, the larger transformation of Canada’s housing landscape will likely take several years, even with cross-party cooperation.
Carney has framed his plan as a return to Canada’s post-war housing roots, invoking the massive build-out that followed WWII. Whether his government can replicate that scale of action in today’s economic and political climate remains to be seen.
