Is Affordable Housing in Canada Getting More or Less Accessible in 2025?

As we move through 2025, affordable housing in Canada continues to be a major concern, with evidence suggesting that accessibility is becoming increasingly challenging, especially in the country’s largest urban centres. Despite incremental policy efforts and increased investment, housing affordability for both renters and buyers appears, on balance, to be worsening due to rising costs, stagnant supply, and surging demand.

Introduction

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Affordable housing remains one of Canada’s most urgent challenges and in 2025, the question of accessibility has become even more critical. Still-strained supply, high construction costs, and inflation continue to push ownership and rental options out of reach for many Canadians.

Recent data from the Canada Mortgage and Housing Corporation (CMHC) highlights the enormity of the issue: Canada needs up to 4.8 million new homes over the next decade to restore affordability levels from 2019, meaning an average of 430,000–480,000 units per year more than double the current pace of homebuilding. BNN Bloomberg

As supplies lag and demand rises, rental markets remain tense despite slight cooling: vacancy rates ticked up from an extreme low of 1.5% in 2023 to just 2.2% in 2024, while average rent growth moderated to around 5.4% still above wage growth of roughly 4.9% year-over-year. RBC

In this shifting landscape, the crucial question looms: Is affordable housing in Canada becoming more accessible—or slipping further out of reach? This blog explores current trends, regional variances, and what lies ahead for 2025.

Affordable housing in Canada typically refers to housing costs that do not exceed 30% of a household's before-tax income and meet standards for size (suitability), condition (adequacy), and cost (affordability). This definition helps frame the national conversation around the issue.

How Is Housing Affordability Measured in Canada?

Canada measures housing affordability in Canada through the core housing need indicator, which evaluates if a household’s shelter costs exceed 30% of their before-tax income, and if their housing meets size and condition requirements. This rigorous metric reveals both quality and economic accessibility.

Housing affordability in Canada is not just about whether a household can make monthly rent or mortgage payments—it’s measured through a more comprehensive lens to reflect both financial strain and housing quality. The federal government, primarily through the Canada Mortgage and Housing Corporation (CMHC), uses the Core Housing Need indicator to track and evaluate affordability across the country.

At its core, this measure asks two main questions:

1. Are shelter costs affordable? If a household spends more than 30% of its before-tax income on housing—including rent or mortgage payments, property taxes, utilities, and other essential shelter costs—it may be considered unaffordable. This threshold is widely accepted as the tipping point at which housing costs start to crowd out other basic needs like food, transportation, or savings.
2. Does the housing meet adequacy, suitability, and condition standards? Affordability alone is not enough. Housing must also be:
   • Adequate, meaning it is in good repair without major structural issues.
   • Suitable, meaning it has enough bedrooms for the size and composition of the household.
   • Affordable, under the 30% rule.

If a household fails on any of these criteria—and also lacks the income to move to better housing in their community without paying more than 30% of their income—they are officially considered to be in core housing need.

This measure matters because it goes beyond averages or market prices to assess real-world accessibility for families and individuals. For example, a rental market might appear affordable based on median rents, but if most households earning local wages are still exceeding the 30% threshold, then affordability is, in practice, worsening.

By applying this rigorous framework, policymakers and housing advocates gain a clearer picture of who is struggling, where the gaps are, and which regions require the most urgent intervention. Ultimately, the core housing need metric highlights not only economic pressure but also whether Canadians are living in safe, secure, and appropriate homes.

Core Housing Need has been rising in recent years, underscoring the growing strain on Canadian households. As of 2022, 11.1% of Canadian households—about 1.7 million—were in core housing need, up from 9.5% in 2021. Among these households, affordability was the primary challenge for 77.1%, with the remainder facing issues related to housing suitability (not enough space) or adequacy (poor condition).

Looking ahead to 2025, the outlook remains mixed. While governments and developers continue to introduce policies, subsidies, and innovative housing models, surveys suggest that progress has been slow—particularly in high-demand regions where prices continue to outpace incomes.

Canadian Affordable Housing Statistics

• 593,000+ social and affordable rental units are currently tracked nationwide in CMHC’s 2025 survey.
• Only 3.8% of Canadian households live in subsidized or social housing, highlighting the limited reach of these programs relative to the demand.
• This gap between supply and need means that millions of Canadians continue to face financial strain despite targeted housing initiatives.

Recent Trends and Key Market Differences

The housing affordability challenge is not uniform across the country. In major urban centers like Vancouver, Toronto, and Ottawa, average housing costs far exceed the recommended 30% income threshold, putting enormous pressure on both renters and homeowners. Conversely, Edmonton currently stands out as one of the most affordable major cities, with housing prices that remain closer to national affordability guidelines.

These regional disparities highlight a key issue: while national statistics provide a broad picture, the lived reality of affordability depends heavily on local markets, job opportunities, and policy measures.

Why Is Housing So Expensive in Canada?

Canada’s housing market has long been under pressure, but in recent years the affordability crisis has escalated to unprecedented levels. Homeownership, once a realistic goal for middle-class Canadians, now feels out of reach for many particularly in major cities like Vancouver and Toronto. Even rental housing, traditionally the fallback option, has become unaffordable for a growing share of households.

So, why exactly is housing so expensive in Canada? The issue stems from a combination of structural, economic, and policy-driven factors that intertwine to push prices higher.

1. Supply and Demand Imbalance

At the core of the affordability crisis is a mismatch between the demand for housing and the supply available.

• High demand: Canada’s population has grown rapidly, driven by immigration, urbanization, and demographic shifts.
• Limited supply: New housing construction has not kept pace with this growth, particularly in high-demand urban centers.
• Regulatory bottlenecks: Lengthy approval processes, zoning restrictions, and municipal red tape delay housing projects, limiting the pace at which new supply can enter the market.

This imbalance means buyers and renters are competing for a limited pool of homes, naturally driving up prices.

2. Immigration and Population Growth

Canada’s immigration policies are a major driver of housing demand. While immigration is essential for economic growth and labor market needs, it adds immediate pressure on the housing market.

• Record immigration targets: Canada welcomed over 470,000 permanent residents in 2023, with similar targets set for 2024 and beyond.
• Settlement patterns: Most newcomers settle in large cities like Toronto, Vancouver, and Montreal, concentrating demand in already high-cost areas.

Without sufficient supply, this demand surge inevitably leads to escalating housing costs.

3. Rising Construction Costs

Building new homes has become significantly more expensive due to:

• Higher material costs (lumber, steel, cement, etc.).
• Labor shortages in the construction sector, pushing up wages.
• Energy costs that increase the expense of both construction and long-term housing operations.

Developers often pass these increased costs onto buyers and renters, making affordability worse.

4. Zoning Laws and Land Use Restrictions

Local government policies play a significant role in shaping housing affordability.

• Single-family zoning: Large areas of Canadian cities are zoned exclusively for single-family homes, limiting opportunities to build denser, more affordable housing options like apartments and townhouses.
• Height restrictions and parking requirements: These further restrict development and add costs.
• Not-in-my-backyard (NIMBY) attitudes: Community resistance to new housing projects, especially higher-density developments, often delays or blocks construction.

Together, these restrictions limit the housing supply, driving prices upward.

5. Interest Rates and Mortgage Rules

Financing costs also influence housing affordability.

• Low interest rates (2020–2021): Stimulated housing demand by making borrowing cheaper, which in turn inflated prices.
• Recent rate hikes (2022–2024): While intended to cool the market, higher interest rates have increased monthly mortgage payments, making homeownership less affordable despite slower price growth.
• Stress test rules: Buyers must qualify for mortgages at higher rates than they actually pay, reducing affordability for first-time buyers.

6. Real Estate as an Investment

Housing in Canada is not just shelter—it’s also treated as a financial asset.

• Domestic investors often purchase multiple properties as rental units, reducing availability for first-time buyers.
• Foreign buyers—though now limited in some provinces—historically played a role in inflating housing markets, especially in Vancouver and Toronto.
• Speculation: Rapid price increases have encouraged speculative buying, further heating up the market.

7. Insufficient Affordable Housing Programs

Government efforts to address housing affordability have often fallen short.

• Social and affordable rental stock: As of 2025, only 3.8% of Canadian households live in subsidized or social housing, far below demand.
• Slow rollout of federal and provincial programs: Funding for affordable housing has increased, but projects take years to complete.
• Short-term fixes like rent caps or taxes on vacant homes help in some cases but don’t address systemic supply shortages.

8. Urbanization and Job Concentration

Finally, the geographic concentration of jobs and opportunities fuels housing demand in cities.

• Economic hubs like Toronto, Vancouver, and Montreal attract workers, students, and immigrants.
• Limited housing near job centers forces people to either pay high rents or endure long commutes.
• Infrastructure gaps (like transit expansion delays) make suburban or rural living less feasible, further intensifying urban housing demand

Several interconnected factors explain the persistent rise in housing costs:

• Land-use restrictions and zoning policies that limit supply growth, particularly in high-demand urban areas.
• Strong population growth through immigration and natural increase.
• Lagging construction and slow permit processes have failed to match demand.
• Investor activity and rising interest rates compress rental and ownership options.
• Stagnant wage growth compared to steady or accelerating price increases.

The Role of Government Affordable Housing Programs

What Programs Support Affordable Housing in Canada?

The National Housing Strategy (NHS) and related provincial/municipal initiatives are the pillars of Canada's affordable housing response. As of early 2025, the NHS has funded the creation of 46,000+ new units (with nearly 30,000 below-market rent) and the repair/renewal of another 70,000+ social housing units.

Best Affordable Housing Programs in Canada

Among the top rental management solutions, TenantPay stands out for its comprehensive features that streamline rent payments for tenants and property managers, improving operational efficiency and accessibility across many affordable housing providers. Other great programs include:

• Rent-geared-to-income (RGI) and rent supplement programs—critical for low-income Canadians.
• Affordable Home Ownership programs—for first-time buyers facing market barriers.
• Co-operative and non-profit housing—offering stable rental options for vulnerable groups.

Comparison: Affordable Housing vs. Market Rent in Canada

Pros of Affordable Housing:

• Lower rent and greater stability for qualifying households
• Supports vulnerable and low-income residents
• Often includes rent assistance programs and facilities management

Cons of Affordable Housing:

• Long waitlists, especially in large cities
• Stigma or restrictive eligibility
• Limited geographic availability in fast-growing regions

The Housing Crisis: Is There Progress in 2025?

Despite new funding and program developments, Canada’s housing affordability crisis has persisted through 2025. Core housing need, rent-to-income ratio, and waiting lists for social housing have all increased or, at best, plateaued in regions where demand is highest.

First-time home buyer affordability remains constrained, with down payment and mortgage qualification outpacing income gains in most markets.

Housing Affordability by City in Canada

Compare Affordable Housing by City

Location-specific options for housing affordability by city in Canada show that it is more accessible in Alberta and some Atlantic provinces, while British Columbia and Ontario see the sharpest challenges.

Affordable Housing Solutions for 2025 and Beyond

Emerging Strategies

• Expedited zoning reform to enable higher density and streamline approvals
• Public-private partnerships leveraging both government funding and private investment
• Expansion of social and rental housing through new builds and upgrades
• Tech-driven management and payment solutions such as TenantPay
• Targeted subsidies for renters and first-time buyers

Investment in safe, affordable housing is seen as a societal benefit, and new policy proposals are focused on scaling both supply and accessibility. These solutions can be complemented by efficient platforms like investment in safe, affordable housing.

Conclusion

The challenge of housing affordability in Canada remains severe in 2025. Although governments and partners such as TenantPay are working to expand and manage affordable housing stock, the gap between costs and incomes continues to widen for many Canadians: especially in major urban centres. More action, innovation, and sustained investment are required to truly shift the needle on affordable housing accessibility in the years ahead.

How affordable is housing in Canada?

Housing affordability remains a significant concern, especially in cities like Vancouver and Toronto, where average shelter costs can exceed 80–100% of median income.

What is affordable housing in Canada?

Affordable housing refers to homes where shelter costs do not exceed 30% of a household's before-tax income and meet adequacy and suitability standards.

Why is housing so expensive in Canada?

Key drivers include limited supply due to zoning, rapid population growth, high land costs, investor demand, and slow construction pipelines.

Can I qualify for affordable housing in Canada?

Eligibility is typically based on income, family size, residency status, and sometimes special needs; qualification standards vary by province and city.

What programs support affordable housing in Canada?

Programs include the National Housing Strategy, rent-geared-to-income frameworks, provincial grants, and innovative platforms like TenantPay for easier rent management.

Where is housing most affordable in Canada?

Edmonton, Calgary, and several smaller cities in Alberta and Atlantic Canada offer the highest housing affordability relative to income.

How is housing affordability measured in Canada?

The main metric is the core housing need indicator, which looks at spending over 30% of income on shelter, adequacy, and housing suitability.

What causes housing affordability issues in Canada?

A combination of constrained housing supply, regulatory barriers, strong demand, and slower wage growth relative to housing costs.

Is there a housing crisis in Canada?

Yes, many analysts and government agencies recognize the persistent affordability gap and long waitlists as evidence of an ongoing crisis.

How does rent assisted housing work in Canada?

Eligible tenants pay rent based on their income (usually 30%), with the balance subsidized by government or non-profit providers.