Canadian Prime Minister Mark Carney will make housing one of his top economic priorities for his incoming government.

In the April 28 federal election, Carney and the Liberals defeated Pierre Poilievre and the Conservatives, obtaining a minority government. Now that the campaign is over, the prime minister and the Grits will get to work and submit policies to grapple with some of the nation’s biggest challenges.

The prime minister, in his first press conference since winning the election, vowed to transform Canada’s economy as the country engages in battles at home and abroad. A key plank of his government’s priorities will be housing, pledging to “create an entirely new Canadian housing industry.”

As part of a broader effort to double the pace of homebuilding to approximately 500,000 new homes per year, Carney has revealed several key ideas to achieve this lofty aim:

• Extend $25 billion in financing for prefabricated home builders.
• Eliminate the GST on new homes priced between $1 million and $1.5 million. The GST will also be removed for first-time buyers for newly-built homes below $1 million.
• Lower municipal development charges for multi-unit residential housing.
• Cap immigration levels to ease housing demand pressures.

In addition, the former head of the Bank of Canada and the Bank of England will establish Build Canada Homes, a government agency overseeing affordable housing development.

This may be the beginning of more things to come.

“In the coming weeks, I will unveil more of our plan to engage with Canadians as we embark on the biggest transformation of our economy since the end of the Second World War,” he told reporters.

Indeed, housing affordability has deteriorated across the country over the last few years. According to housing data from the Canadian Real Estate Association (CREA), the national average home price is about $679,000, nearly 40 percent higher than pre-crisis levels.

Will Carney’s plans succeed in building supply and restoring price stability for prospective middle-income homebuyers in major urban centres and rural communities? Will the country reverse the trend of becoming a nation of renters? Will home prices be within reach for millions of Canadians? Will policymakers only focus on Toronto and Vancouver?

Industry experts have mixed views about the prime minister’s proposals.

What Canadians Can Expect When It Comes to Housing Under the ‘New’ Liberal Government

Carney’s GST idea, which his Conservative challenger also presented, is widely expected to pass almost as soon as the House of Commons is reconvened.

But whether it restores housing affordably or not remains to be seen.

Penelope Graham, a mortgage expert at Ratehub, told Global News that it is a positive move but would be a “drop in the bucket” for bolstering housing affordability.

“Will this move the dial in terms of affordability? Likely not in the more expensive markets. Pricing for brand-new construction is considerably higher than it is for resale stock. For example, the benchmark price for a new condo in Toronto is already a million dollars. That’s compared to a resale unit, which is around $680,000,” she said.

Experts say the bright spot in Carney’s housing plan is its emphasis on prefabricated housing. These units are constructed off-site in a factory and transported to a final location for assembly.

Studies show that prefab homes can reduce costs by up to 20 per cent and lower construction times by 50 per cent.

“Modular construction does not inherently mean affordable construction costs, but costs can become more predictable if they are intentionally controlled in the design and planning process,” an August 2024 University of Toronto study stated.

Despite research indicating their efficacy, factory-built homes account for less than 5 percent of Canada’s housing market, according to The Globe and Mail.

The Liberal plan would expand the supply by close to half a million new homes every year for the next decade. According to the prime minister, the new federal housing entity and an extension of the Housing Accelerator Fund would accomplish this.

While it is ambitious, experts say it is hard to envision happening as it did following the Second World War.

“When [CMHC] was involved in direct delivery of various programs back in the ’70s, ’80s and ’90s, they established a network in the early post-war period of 96 branch offices across the country, staffed with architects, engineers, building inspectors, loans officers, underwriters, and so on,” said Steve Pomeroy, industry professor at McMaster University’s Canadian Housing Evidence Collaborative, in an interview with Global News.

“I can’t imagine how at a single federal agency, you would actually be able to emulate that kind of support for local development.”

Caution: Work Ahead

The Canadian real estate market has undergone many developments in recent years, from soaring mortgage rates to a spike in demand. While Canadian officials at all three levels of government have offered solutions to the country’s housing challenges, affordability remains elusive. Will Prime Minister Carney’s plans ensure more households have access to the Canadian Dream of homeownership? The jury is still out.