Canada has entered a new political chapter, and with it comes renewed promises to address the ongoing housing crisis. As housing affordability continues to be a top concern—especially in major cities like Toronto—the federal government has laid out bold targets and policy shifts intended to reshape the residential landscape.
Here’s a clear overview of the major housing commitments and what they could mean for Canadians over the next four years.
Doubling Housing Construction
At the centre of the plan is a commitment to double the current rate of residential construction—from around 250,000 homes a year to 500,000. This goal draws inspiration from the post-WWII housing boom, aiming to build quickly, affordably, and on a national scale using Canadian labour, materials, and technologies.
Achieving this level of output, however, poses several challenges. Developers continue to face high interest rates, rising material costs, and slower presales. Without significant financial support or policy intervention, private development alone may not be able to meet these targets.
Build Canada Homes Initiative
To stimulate progress, a new government-led organization called Build Canada Homes will be established. This entity aims to:
Prefabricated (or modular) homes are expected to play a key role in this strategy. These units are built in factories and assembled on-site, allowing for faster construction timelines. While this approach works in many regions, it may be less practical in dense urban areas like Toronto, where buyers typically seek family-sized homes in established neighbourhoods—and where land is limited.
GST Relief on New Builds
One of the headline promises is the elimination of GST on newly built homes priced at or below $1 million for first-time buyers. This aims to ease the financial burden on young Canadians entering the market, while encouraging developers to launch new projects.
However, this measure applies only to newly constructed homes. For buyers in cities where most housing stock is resale rather than new builds, the benefit may be minimal. Moreover, new homes often come at a premium—currently around 40% more than comparable resale properties—limiting the savings potential.
Tax Incentives for Rental Housing
To increase rental supply, the government plans to reintroduce tax incentives from the 1970s through a framework known as MURB (Multiple Unit Residential Buildings). This would allow rental property investors to deduct not just operational costs but also depreciation, offering a more favourable tax position.
While this could lead to more rental units and ease pressure on rents, it may not improve affordability for home buyers. Developers converting single-family homes into multi-unit rentals also face barriers like high development charges, construction costs, and new anti-flipping taxes that limit short-term project profitability.
Cutting Red Tape
The existing Housing Accelerator Fund is set to continue, with promises of increased transparency and performance tracking for municipalities. The plan includes cutting development charges in half for multi-unit residential housing, with federal support to offset the resulting loss in municipal revenue—at least for the first five years.
Still, the question remains: if cities reduce or eliminate fees, how will they fund the infrastructure (parks, roads, services) tied to new development? One possibility is higher property taxes, which would shift the cost to future homeowners.
Market Realities and Developer Response
Despite ambitious plans, industry experts remain cautious. Developers continue to cite financing constraints and bureaucratic delays as key obstacles. Many stress the need for more pro-development policies, streamlined approvals, and stronger financial incentives to bring projects to life.
If conditions don’t change, we may face an even tighter housing market in the coming years. Projects that are delayed now will result in fewer completions in 2027, 2028, and beyond—especially in the condo sector, which typically requires longer timelines.
What This Means for Buyers in 2025
As we move into 2025, Canadians are asking whether these policy changes will meaningfully shift affordability or availability. For prospective buyers who have been waiting on the sidelines, this may be a moment to reevaluate. However, with interest rates still high and new construction facing cost hurdles, the immediate benefits may not yet be visible.
The gap between new and resale homes remains wide, and the proposed tax breaks—while helpful—might not bridge that divide entirely.
The new housing agenda is ambitious and wide-reaching, but its success depends heavily on execution, collaboration between all levels of government, and private sector confidence. Whether these policies translate into tangible improvements for buyers, renters, and builders will become clearer as the months go on.
As always, staying informed and watching how these changes play out locally—especially in competitive markets like Toronto—will be key for anyone making real estate decisions in the near future.
Here’s a clear overview of the major housing commitments and what they could mean for Canadians over the next four years.
Doubling Housing Construction
At the centre of the plan is a commitment to double the current rate of residential construction—from around 250,000 homes a year to 500,000. This goal draws inspiration from the post-WWII housing boom, aiming to build quickly, affordably, and on a national scale using Canadian labour, materials, and technologies.
Achieving this level of output, however, poses several challenges. Developers continue to face high interest rates, rising material costs, and slower presales. Without significant financial support or policy intervention, private development alone may not be able to meet these targets.
Build Canada Homes Initiative
To stimulate progress, a new government-led organization called Build Canada Homes will be established. This entity aims to:
- Construct affordable housing directly.
- Offer $25 billion in debt financing and $1 billion in equity support to Canadian prefabricated home builders.
- Issue bulk orders to stabilize demand in the prefab sector.
- Provide $10 billion in financing for affordable housing developers.
Prefabricated (or modular) homes are expected to play a key role in this strategy. These units are built in factories and assembled on-site, allowing for faster construction timelines. While this approach works in many regions, it may be less practical in dense urban areas like Toronto, where buyers typically seek family-sized homes in established neighbourhoods—and where land is limited.
GST Relief on New Builds
One of the headline promises is the elimination of GST on newly built homes priced at or below $1 million for first-time buyers. This aims to ease the financial burden on young Canadians entering the market, while encouraging developers to launch new projects.
However, this measure applies only to newly constructed homes. For buyers in cities where most housing stock is resale rather than new builds, the benefit may be minimal. Moreover, new homes often come at a premium—currently around 40% more than comparable resale properties—limiting the savings potential.
Tax Incentives for Rental Housing
To increase rental supply, the government plans to reintroduce tax incentives from the 1970s through a framework known as MURB (Multiple Unit Residential Buildings). This would allow rental property investors to deduct not just operational costs but also depreciation, offering a more favourable tax position.
While this could lead to more rental units and ease pressure on rents, it may not improve affordability for home buyers. Developers converting single-family homes into multi-unit rentals also face barriers like high development charges, construction costs, and new anti-flipping taxes that limit short-term project profitability.
Cutting Red Tape
The existing Housing Accelerator Fund is set to continue, with promises of increased transparency and performance tracking for municipalities. The plan includes cutting development charges in half for multi-unit residential housing, with federal support to offset the resulting loss in municipal revenue—at least for the first five years.
Still, the question remains: if cities reduce or eliminate fees, how will they fund the infrastructure (parks, roads, services) tied to new development? One possibility is higher property taxes, which would shift the cost to future homeowners.
Market Realities and Developer Response
Despite ambitious plans, industry experts remain cautious. Developers continue to cite financing constraints and bureaucratic delays as key obstacles. Many stress the need for more pro-development policies, streamlined approvals, and stronger financial incentives to bring projects to life.
If conditions don’t change, we may face an even tighter housing market in the coming years. Projects that are delayed now will result in fewer completions in 2027, 2028, and beyond—especially in the condo sector, which typically requires longer timelines.
What This Means for Buyers in 2025
As we move into 2025, Canadians are asking whether these policy changes will meaningfully shift affordability or availability. For prospective buyers who have been waiting on the sidelines, this may be a moment to reevaluate. However, with interest rates still high and new construction facing cost hurdles, the immediate benefits may not yet be visible.
The gap between new and resale homes remains wide, and the proposed tax breaks—while helpful—might not bridge that divide entirely.
The new housing agenda is ambitious and wide-reaching, but its success depends heavily on execution, collaboration between all levels of government, and private sector confidence. Whether these policies translate into tangible improvements for buyers, renters, and builders will become clearer as the months go on.
As always, staying informed and watching how these changes play out locally—especially in competitive markets like Toronto—will be key for anyone making real estate decisions in the near future.
