Senate committee report on Canada's housing affordability crisis
Out of Reach: Unlocking Canada’s housing affordability crisis. Standing Senate Committee on Banking, Commerce and the Economy. January 20, 2026. 49 pages.
Introduction
Over the course of nine meetings, the committee heard from over twenty witnesses including federal government officials, developers and other representatives from the construction industry, private equity firms, think tanks, non-profit organizations, researchers and economists. Written briefs were also provided.
This report provides a summary of witness testimony, committee observations and recommendations for key policy changes necessary for reducing housing prices and increasing supply, supporting a robust housing sector and improving access to housing for all Canadians.
I thought the report was both sensible and readable. There’s a focus on improving supply:
Witnesses agreed that the main solution to improving housing affordability in Canada is increasing supply and many stressed that policy changes should focus on increasing supply, rather than measures that would simply increase the amount of debt people can take on to buy a house.
Reducing costs
The GST is a key lever that the federal government has. “Mike Moffatt observed that the federal government can make tax changes very quickly, as compared to other types of policy changes.” A specific recommendation is to expand the GST/HST rebate.
Some good discussion of development charges and infrastructure funding:
Witnesses spoke about the impacts that government charges, particularly development charges, have on both tax fairness and the affordability of housing in Canada. Witnesses noted that, as the price of homes has risen in recent years, the scale and significance of development charges have also risen, bringing these charges to the forefront of discussions, particularly in Ontario and British Columbia. Peter Norman of the Altus Group noted the average level of municipal fees on a single-family home is $200,000 in Toronto and less than $10,000 in Moncton and Charlottetown.
Some specific recommendations:
Make federal infrastructure funding conditional on equivalent reductions in municipal fees.
Make fees directly payable by purchasers, instead of being hidden and subject to tax on tax.
Work with provinces and municipalities on alternative funding models, like charging fees to pay for infrastructure over time, and using tax-free bonds.
The approval bottleneck
Lengthy approval times for new developments and onerous municipal regulations were identified by several witnesses as major barriers to building new housing.
David McKay from MHBC Planning, Urban Design and Landscape Architecture emphasized that delays in the approvals process equates to housing cost increases. He referred to an Altus Group report that found with a 100-unit apartment building, the delays in approvals cost approximately $58,000 per unit in Ontario. He also cited recent CMHC studies which found that where regulations were complex and lengthy, for example in the Greater Toronto Area and the Greater Vancouver Area, this resulted in housing becoming unaffordable; however, where processes were less complex and less time consuming, housing prices were lower, such as in the Prairies, Atlantic Canada and Quebec.
In his view, these delays in approval are caused by antiquated regulatory regimes that are not able to meet the market demand; the approvals process becoming much more complex and bureaucratic, often with multiple approval processes that are not concurrent; having multiple review stages with competing objectives from different departments or agencies; and significant shortages in staff trained to review applications.
Officials from CMHC also gave examples of cities that make a conscious effort to ensure the regulatory burden does not escalate. They highlighted Kelowna, B.C., which has adopted systems to ensure that one application can be integrated across different departments, and Edmonton, which due to its efficient approval processes, has the highest number of housing starts per capita in Canada.
Recommended action:
The committee recognizes that the federal government does not directly participate in municipal approval processes or municipal regulation, and therefore, it is difficult for the federal government to influence change in these areas. The committee reasserts that the main federal lever to promote improvements in processes at the municipal level and encourage densification is through federal funding for municipal infrastructure.
Whether negotiations occur through the provinces/territories or directly with the municipalities, it will take time to find a successful funding formula that works on a national scale. However, at the same time, the federal government can play a leadership role in gathering the provinces/territories, municipalities and other relevant stakeholders together to expand and further develop the list of best practices to cut regulatory burden that has been started under the Housing Accelerator Fund, with particular focus on the development approval process.
As noted above, financial incentives will likely be the best way to ensure the adoption of these best practices.
More
Huge disparities in housing approvals and development fees found across Canadian cities by Senate report. Salmaan Farooqui, Globe and Mail, January 21, 2026. Reddit thread.
Minutes, transcripts, and video are available from the Studies & Bills page for the 45th Parliament, 1st Session. See the section titled: “Examine and report on Canada’s housing crisis and the challenges currently facing Canadian home buyers, with a particular focus on government taxes, fees and levies.”
Mike Moffatt’s opening statement on October 9, 2025: We Can’t Double Homebuilding by Taxing It to Death.
Thank you for having us here today. My name is Mike Moffatt, and my colleague Alex Beheshti has also joined us; we are from the University of Ottawa’s Missing Middle Initiative. We’re a think tank devoted to helping create a Canada where every middle-class individual or family, in every city, has a high quality of life and access to both market-rate rental and market-rate ownership housing options that are affordable, adequate, suitable, resilient, and climate-friendly.
We’re here to talk about the decline in housing activity we’re seeing across Canada, particularly in large urban centres.
Across much of Canada, home prices and rents have fallen in recent years. For families that have spent years on the outside looking in, that should be welcome news. Yet affordability remains elusive. Home prices are still far beyond the reach of most middle-class households, while the cost of construction remains stubbornly high. In many markets, the total cost of building now exceeds what families can afford. This creates a paradoxical situation where homes are both unaffordable for buyers and uneconomic to build. The only sustainable path toward attainable prices and increased housing supply is to lower construction costs, which means cutting the taxes that drive those costs up.
Superficially, Canada’s housing starts appear stable, especially outside Ontario, but this is misleading. Housing starts reflect projects that were financed and sold during the boom years of 2021 and 2022. The real-time indicator is new home sales, and the picture there is grim. A report from the Missing Middle Initiative’s Jesse Helmer finds that new home sales across the Greater Toronto Area and the Greater Golden Horseshoe have declined by more than 80 percent from 2021 levels. The collapse extends beyond Toronto condos, affecting detached homes, townhouses, and mid-rise apartments nationwide, including in Vancouver and Calgary.
The Canada Mortgage and Housing Corporation warns that today’s drop in sales will translate into fewer housing starts tomorrow. Its latest forecast projects 30,000 fewer starts between 2024 and 2027. Using Statistics Canada’s employment multipliers, that decline implies nearly 100,000 lost jobs nationwide, including skilled trades, such as plumbers, framers, and electricians, as well as the workers who supply everything from windows to lumber. When 15,000 auto manufacturing jobs were at risk in 2008, governments took decisive action to preserve the sector. The stakes are far higher now, because housing isn’t a consumer good; it’s essential infrastructure. If tens of thousands of skilled construction workers leave the industry, the goal of doubling homebuilding becomes unattainable.
Governments claim to want more housing, yet their tax systems make it increasingly uneconomic to build. The combined burden of the GST, PST, development charges, and fees can add hundreds of thousands of dollars to the cost of a new home. When I bought a new home in London, Ontario, in 2004 for $168,000, the taxes and fees were under $16,000. Today, the taxes alone on a similar home are roughly that much. These costs directly determine whether a project can proceed, and as prices fall while taxes stay high, more builders are shelving projects.
Some argue that cutting housing taxes would result in governments losing too much revenue. In reality, the opposite is true. Our estimates show that the federal government will lose over $3 billion annually in forgone revenues from the GTA and Vancouver alone if construction continues to decline, exceeding the entire budget of the Build Canada Homes program. Taxing new homes out of existence is not a fiscally prudent approach.
Housing cannot be both a right and taxed like a luxury yacht. Ottawa imposes a 10 percent luxury tax on yachts worth over $1 million, yet a middle-class family buying a semi in Scarborough pays the equivalent of 15 percent in development charges and land transfer taxes, plus GST and PST on top of that. If we want to make quality homes affordable again, we must stop taxing them out of existence. The choice is clear: cut the cost of homebuilding now, or face the double blow of fewer homes and 100,000 lost jobs.
We look forward to your questions.
A couple more Missing Middle Initiative posts:
Housing Can’t Be a Right If We Tax It Like a Luxury. Mike Moffatt’s opening statement to the House of Commons’ Standing Committee on Finance. October 1, 2025.
The GTA’s Housing Collapse: Governments Lose $6B+ Annually. September 30, 2025.
From Vancouver to Montréal, Canada’s Housing Engine Is Stalling. October 28, 2025.