Budget Watchdog Says Impact of Government’s Home-Building Plan to Be ‘Modest’

The Liberal government’s Build Canada Homes initiative, billed as a way to help double the pace of housing construction, will create just 26,000 housing units over five years, representing a 2.1 percent increase in housing completions, according to the Parliamentary Budget Officer (PBO).

Build Canada Homes, a new federal agency intended to create housing through direct construction and support for construction and acquisitions, has allocated $7.3 billion in planned spending over the next five years.

The PBO estimated that Build Canada Homes would represent a “modest contribution toward housing supply and affordability,” with the addition of about 26,000 units over five years. It estimates that of the 26,000 new housing units, 13,000 will be for low-income households.

The PBO added that though Build Canada Homes currently has the funding to create around 13,000 new units of housing affordable for low-income households, this occurs “within a context of declining spending and a shift away from immediate affordability supports” such as the Canada Housing Benefit and support for existing social housing.

Prime Minister Mark Carney launched Build Canada Homes on Sept. 14, which aims to accelerate the construction of affordable housing units for low-income and middle-class Canadians by partnering with private developers, leveraging public land, financing, and modern construction methods. It aims to double the current rate of housing construction to roughly 500,000 new homes built per year.

The program’s $7.3 billion spending plan includes $625 million to help community housing providers acquire rental apartments, $1 billion in contributions towards transitional and supportive housing, and $5.4 billion in grants, contributions, and loan concessions for the supply of affordable housing.

The federal government has also removed the GST for first-time homebuyers on homes at or under $1 million, which Carney previously said would save first-time homebuyers up to $50,000 and “spur housing construction across the country.”

The PBO noted the government has not released a plan to achieve its goal of doubling the pace of housing construction over the next decade.

The PBO said the building of 26,000 units would address 3.7 percent of the office’s estimated 2035 housing gap of 690,000 units. Closing the gap would require a total of 3.2 million net new housing units by 2035, which translates into 290,000 total units completed annually.

Yves Giroux, who previously served as the PBO prior to Jason Jacques taking the position in September, projected that Canada would need 1.3 million new homes by 2030 to reduce the country’s housing gap and restore its long-term vacancy rate. When combined with baseline housing completions, hitting this goal would mean building 3.1 million new units by 2030, representing an 80 percent jump over 2023 levels of completion.

Housing Minister Gregor Robertson said during debate in the House of Commons on Dec. 1 that building starts in Canada are up in 2025 compared to the previous year.

“If we look at year to year, we are moving up. We are investing $13 billion in Build Canada Homes, which is focused on non-market housing and market housing that leverages it,” he said.

Robertson told reporters on Dec. 2 that Build Canada Homes is “just launching,” and the Liberal government will be “scaling that work, bringing capital to the table so we can build on affordable housing at an unprecedented scale.”

“We want to make sure we’re working with the provinces and the cities in particular to deliver the housing and lots of work ahead of us. This is just the very beginning,” he said.