It’s one of the biggest federal housing pushes in decades, but can it deliver on its promise?
Mark Carney’s Liberal Government recently released a budget that includes a big housing initiative. Promising to “build more homes, faster,” the budget commits $13 billion to accelerating affordable housing construction. It also includes several other measures intended to provide much-needed affordable housing for Canadians struggling to find a place to live.
Can the Mark Carney housing plan fix what’s broken? What does the 2025 Canadian federal budget mean for renters and people hoping to buy a home?
What Caused the Housing Crisis?
If you’ve been hoping to buy a home, you’ve seen prices climb out of reach, with rents not far behind. How did we get to this point? Interacting factors have contributed to the problem, including:
- Population growth outpacing construction. We’re now short by millions of units.
- Municipal planning rules in cities have blocked or slowed construction. These rules include zoning restrictions that favour single-family detached homes, parking requirements, and lengthy approval processes.
- Low interest rates have increased demand but have driven prices up.
- Governments stopped building housing and withdrew from funding new construction. In particular, non-profit and co-op construction fell behind, older units were snapped up by developers and resold at much higher prices, and supportive housing wasn’t built or funded.
The Carney housing plan directly addresses some (but not all) of these root causes of the housing crisis.
What’s in the Carney Housing Plan?
Mark Carney’s housing plan, detailed in the 2025 Canadian federal budget, aims to do something Canada hasn’t tried in decades: using federal funds, freeing up federal land, starting a new federal agency, and applying the resources of the federal government to jump-start homebuilding at scale.
Here’s what’s in the plan:
- $13 billion in funding for Build Canada Homes, a new federal agency that will ramp up affordable home construction by:
- Releasing public lands for housing development.
- Providing financing for development through direct financing and loan guarantees.
- Focusing on methods that get homes built faster, such as modular and factory-built housing.
- Concentrating on sites where additional housing is desperately needed.
- Elimination of GST for first-time buyers of homes under $1 million.
- $1.5 billion to preserve the long-term affordability of rental buildings by making it easier for community housing organizations to buy them.
- $1 billion to build transitional and supportive housing units for people experiencing homelessness.
- $51 billion over 10 years for the Build Canada Strong Fund, which is earmarked for local infrastructure required to build housing (i.e. roads, sewers, water supply)
The overall goal of the Carney housing plan is to nearly double the rate of annual housing starts, a target Canada hasn’t hit in the modern era.
Criticisms of the Carney Housing Plan
Since the release of the Canadian Federal Budget, community groups, developers, and housing advocates have praised the plan for its ambition, but have pointed to these flaws:
- Failure to fix the red tape and taxes that hinder developers. Developers say that regulatory barriers and high development charges stand in the way of building quickly and inexpensively.
- Competition for labour: Developers worry that Build Canada Homes will drain the limited pool of skilled tradespeople.
- Limited GST relief: Critics argue that GST should be eliminated for all home buyers at all price levels.
- Few protections for renters. Housing advocates complain that Mark Carney’s housing plan doesn’t protect renters from renovictions and “no-fault” evictions.
- Unclear directions for smaller and non-profit housing providers: the Carney housing plan seems to favour larger developers, with little clarity on how smaller organizations can access funds.
- Delays in funding rollout: Housing funds, particularly for Indigenous housing initiatives, have been slow to be deployed.
These criticisms have left many groups feeling disappointed by the big promises the Carney housing plan made before the details were announced.
What Could Stand in the Way of the Carney Housing Plan?
Mark Carnney’s housing plan is impressive, but there are a few things that could delay implementation and dampen its impact:
Labour Shortages
Construction trades are in short supply across North America. This has made it more difficult to complete new builds, do renovations, and even get small repairs done. When Build Canada Homes starts construction, builds could be delayed by these shortages.
Slow Changes in Municipal Rules
Zoning regulations, parking spot minimums, height limits, and development fees all need to be adjusted to make it easier and less expensive for developers to build housing at scale. Some municipalities are making changes rapidly, but others are either moving slowly or resisting change.
Construction and Financing Costs
Land in high-demand areas is expensive. Material and labour costs have also risen significantly, and the cost of borrowing is still high. This will make it difficult for developers to build housing in these areas profitably, particularly rentals and mid-rise housing.
Bureaucratic Hurdles
Carney’s ambitious housing initiative is complex, with multiple programs and funding types. Builders and organizations seeking assistance from the new programs and agencies will need to deal with significant bureaucracy to get projects underway. Whereas developers might be able to navigate the obstacles successfully, smaller non-profits could find it too complicated. The plan also has a limited focus on supportive and non-market housing, which further discourages affordable housing for vulnerable populations.
Political Pushback and Resistance
Opposition could come from:
- Current residents and hyper-local neighbourhood groups.
- Municipal and provincial governments.
- The federal opposition parties.
The big ideas in Carney’s housing plan could die before they’re implemented, due to these hurdles.
What Does the Carney Housing Plan Mean for Homebuyers and Renters?
The plan in the 2025 Canadian federal budget includes bold initiatives and a massive investment in housing development, housing-supportive infrastructure, and assistance for housing-insecure populations. It’s an ambitious plan. However, whether it lives up to its promises remains to be seen.
Here’s what to watch for as the plan is implemented:
Increases in Housing Starts
There’s already been a slight upward trend. If housing starts rise toward the federal target, buyers and renters will see more availability, which will drive prices down, or at least stabilize them.
Savings for First-time Buyers
Elimination of the GST for first-time buyers on homes under $1 million (with partial relief for homes up to $1.5 million) will make it more affordable to buy.
More Rental Availability
More rental units should become available, meaning that rents should stabilize over time.
More Supportive Housing
More supportive housing units should become available, but this depends on community organizations being able to access the promised funding.
More and Better Infrastructure and Changes to Zoning
Improvements at the municipal level to support development will depend on municipalities buying into the Build Communities Strong Fund, which is part of the Carney Housing Plan.
Mark Carney’s Housing Plan
The Carney housing plan is visionary, unlike anything Canada has tried to do for housing in decades. If the government can overcome obstacles like labour shortages, local resistance, and bureaucratic hurdles, it has the potential to make housing more affordable for all Canadian residents. If not, it risks becoming another brave plan that falls short of its goals.
