The Persistent Housing Gap

Canada’s housing crisis remains one of the country’s most pressing economic and social challenges. Even as development continues from Vancouver to Halifax, the number of homes being built continues to lag behind the demand generated by an expanding population. For years, this growth has been fuelled primarily by immigration, an essential driver of Canada’s labour force and economic vitality, but also a source of pressure on a housing system that has not kept pace. Recognizing this imbalance, the federal government has begun adjusting its immigration policies to better align with housing supply. Yet, despite these tweaks, the gap between the number of homes Canadians need and the number being built remains significant. Understanding the scale of this gap, and how both immigration and housing policy interact, is essential to finding a sustainable path forward.

The Population and Immigration Boom

Between 2021 and 2024, Canada experienced one of the fastest population growth periods in its recent history. Net population growth exceeded one million in 2023 alone, a figure driven largely by immigration, international students, and temporary foreign workers. This surge was welcomed as a boost to the economy and a way to counteract an aging domestic population, but it also placed significant pressure on the housing market. In late 2024, the federal government responded with a notable policy shift. Under the 2025–2027 Immigration Levels Plan, Canada will reduce the number of permanent residents from about 500,000 in 2024 to 395,000 in 2025, 380,000 in 2026, and 365,000 in 2027. At the same time, Ottawa has introduced caps on temporary resident volumes, including international students and temporary foreign workers, with the goal of reducing temporary residents to five percent of Canada’s total population by the end of 2026. According to the Government of Canada’s Immigration, Refugees and Citizenship Canada (IRCC) announcement in October 2024, the new immigration levels plan is explicitly designed to “alleviate pressure on housing markets, infrastructure, and social services” by reducing the intake of both permanent and temporary residents over the next three years (canada.ca, 2024).Internal projections suggest the policy change could reduce the estimated housing gap by roughly 670,000 units by the end of 2027, compared with earlier forecasts based on higher immigration targets.

How Big Is the Housing Supply Shortfall?

Even with reduced population growth, the supply shortage remains large.Canada currently produces about 245,000 housing starts per year, a figure well below what experts say is required to restore affordability. According to the Canada Mortgage and Housing Corporation (CMHC), the country needs to roughly double this pace, to between 430,000 and 480,000 units annually, in order to restore housing affordability to 2019 levels by 2030. CMHC’s modelling and other analyses put the cumulative “missing homes” anywhere from 1.5 million to 3.5 million units, depending on the baseline and target affordability assumptions. With the new immigration caps, Ottawa’s and the Parliamentary Budget Officer’s (PBO) projections are somewhat more optimistic. The PBO estimates that under the lower immigration plan, the housing shortfall could shrink by nearly half by 2030, from around 1.3 million units under previous growth rates to about 650,000 units. This would relieve some pressure, but not enough to fully close the gap.

When Will the Gap Close?

At the current pace of building of around 245,000 starts annually, the answer remains discouraging. If we take the PBO’s updated figure of roughly 650,000 homes needed to close the gap by 2030, simple math shows it would take about 2.7 years to build that many homes if all construction were directed solely toward closing the gap. But in reality, new demand continues each year from household formation, population growth, and replacement of aging stock. In my opinion, to close the gap entirely, Canada must increase its pace of housing construction, not just reduce immigration. Even with slower population growth, demand for housing will remain robust, especially in major cities where economic opportunities, universities, and infrastructure attract both newcomers and domestic migrants. In other words, the policy shift buys time, but it doesn’t solve the underlying structural shortage in supply. Unless construction productivity rises and development barriers fall, the gap will persist well into the 2030s.

What the Government Has Done So Far

According to the Government of Canada’s National Housing Strategy (2024), federal and provincial authorities have rolled out a series of programs to boost housing supply, affordability, and development capacity, including the Housing Accelerator Fund (HAF), which offers municipalities financial incentives in exchange for faster permitting, zoning reform, and the removal of barriers to higher-density projects (housing-infrastructure.canada.ca, 2024). The federal government has also expanded the Apartment Construction Loan Program and reintroduced GST rebates on new rental construction, which the CHMC estimates could lower costs by up to five percent for new purpose-built rentals (cmhc-schl.gc.ca, 2024). Furthermore, Finance Canada reports that billions have been earmarked for affordable housing projects through the National Housing Co-Investment Fund, while the immigration-level adjustments announced in October 2024 aim to reduce population pressure by capping temporary residents and gradually lowering permanent resident targets to 380,000 by 2026 (canada.ca, 2024). These initiatives demonstrate a more coordinated approach linking immigration, zoning reform, and construction incentives to alleviate housing pressure, though experts such as the PBO note that execution speed and local cooperation remain critical to measurable impact (pbo-dpb.gc.ca, 2024).

What More Could Be Done

According to policy analysis by the Canadian Urban Institute and Regeneration Works, governments could further encourage housing development by providing targeted tax credits and accelerated depreciation for the adaptive reuse of underutilized commercial and heritage buildings, an approach already shown to reduce waste and expand housing stock at lower environmental cost (regenerationworks.ca, 2020). Similarly, CMHC’s Housing Plan (2024) recommends expanding as-of-right zoning for multi-unit and infill development near transit, paired with density bonuses to incentivize private builders (housing-infrastructure.canada.ca, 2024). According to BuildForce Canada (2024), addressing labour shortages by expanding skilled trades training and immigration pathways for construction workers is also essential to close the housing gap more quickly (buildforce.ca, 2024). Lastly, the Federation of Canadian Municipalities has urged Ottawa to tie federal funding to municipal performance metrics, ensuring that local governments meeting approval-time targets or converting vacant land receive priority access to federal infrastructure funds (fcm.ca, 2024). Together, these reforms would make the housing system more responsive, unlocking private capital for both new builds and renovation of Canada’s aging stock while ensuring policy coherence across all levels of government.

The Path Forward

Canada’s new immigration policy marks an important acknowledgment of the link between population growth and housing demand. By scaling back the number of new arrivals and placing limits on temporary residents, Ottawa hopes to relieve immediate pressure on the housing market and give the construction sector room to catch up. However, immigration is not the root cause of the housing crisis, it merely contributes to a supply problem that has been decades in the making. Even with slower population growth, Canada will still need to double its housing-construction pace and invest heavily in renovation, conversion, and skilled-labour capacity to close the gap. The immigration adjustment is best seen not as a solution but as a reprieve, a window of opportunity to fix the structural constraints that keep homes from being built. If policymakers use this period to remove barriers, modernize zoning, and mobilize both private and public investment, Canada could finally begin to bend the curve toward affordability. If not, the gap will persist long after immigration levels stabilize.