(first published in the Niagara Independent)

The Canadian housing market seems set for a sluggish year in 2026. There is certainly some stabilizing going on in most regions, with prices coming down somewhat but not enough to significantly increase demand. This gradual change is much preferable to a housing market crash, which has been so destructive to families and economies in past business cycles. Most analysts are expecting a slight increase in sales in some parts of Canada over the next year, but a slow market overall. 

The fact that economic growth is expected to be anemic in 2026, with the very real possibility of recession, will dampen demand as consumers worry about losing their job. This week, the Bank of Canada stated that the economy was growing at a slower rate than the 1.1 per cent the Bank forecast in January 2026, and that it would have an updated forecast at the end of April. As a result, the Bank chose to hold interest rates unchanged due to worse-than-expected economic data for the first couple of months of this year. Canada is currently the only G7 country to have a shrinking economy. 

The latest report from the Canada Mortgage and Housing Corporation (CMHC) is also not optimistic. CMHC expects housing starts to actually decline from now until 2028. It blames this decline on the high costs of construction and labour for housing developers. Yet speaking with businesses in the housing market, they state that one of the primary barriers is all of the charges imposed by every level of government. It is estimated that about one-third of the cost of a new home is comprised of development charges, taxes, fees, permit costs etc., all levied by governments. There is no question that tariffs imposed by the U.S. on some products used in the construction industry have added to costs, but the largest impediment to new construction continues to be government charges. To date, Canadian governments have indicated no intention of reducing these costs. 

Despite all of these predictions, Prime Minister Mark Carney continues to claim that his government will increase housing starts to 500,000 units annually for the next few years, in part through the Build Canada Homes Corporation he recently created. This is preposterous for a number of reasons, especially considering that Canada has never even achieved 300,000 starts in a year. The all-time record belongs to 1976, when just over 273,000 were recorded. 

Current CMHS projections are for around 200,000 housing starts for the next three years or so, and actual numbers could well come in under that. A recent report from the Parliamentary Budget Officer has housing start predictions that are quite a bit lower than those of CMHC. 

As per the government description, Build Canada Homes has the goal of accelerating the construction of affordable housing by acting as the developer, using public land and modular, factory-built construction techniques. These building methods claim to be able to build 50 per cent faster and 20 per cent cheaper than traditional methods, especially for low-to-mid-rise apartments. The agency claims it will double housing construction in this way, initially with $15 billion taxpayer dollars, with more billions intended to come later. The agency also claims it will attract private sector capital, but it is difficult to see how that will take place. In fact, there is very little detail in federal documentation as to exactly how Build Canada Homes will actually accomplish any of its stated objectives. The plan intends to target first-time home buyers as well as renters and also include a social housing component. 

The Liberal government continues to talk about this unrealistic plan with a straight face. Anyone who understands the industry knows it will fail miserably. The notion of having a government department acting as the developer in housing construction is alone enough to provide doubters with lots of fodder for criticism. The need for more housing supply in Canada is truly serious, but this top-down government approach to solving the problem is not the answer. 

In Carney’s famous Davos speech – which was much overrated in my opinion – he stated that systems of belief tend to fall when people start to tell the truth. It’s hard to disagree with that sentiment, but I’d like to know when he plans to start doing that. His housing plans for Canada certainly don’t.

Catherine Swift

Catherine Swift is President of the Coalition of Concerned Manufacturers & Businesses of Canada (CCMBC). She was previously President of Working Canadians from 2015-2021 & President & CEO of the Canadian Federation of Independent Business (CFIB) from 1995-2014. She was Chief Economist of the CFIB from 1987-1995, Senior Economist with TD Bank from 1983-1987 & held several positions with the federal government from 1976-1983.

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.

She has an Honours BA and MA in Economics.

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