Prime Minister Mark Carney's new federal budget has drawn criticism for its inadequate response to Canada's ongoing housing crisis. Experts argue that the proposed measures do not sufficiently address the overregulation that hampers the construction of new housing. According to the Canada Mortgage and Housing Corporation (CMHC), Canada is facing a national housing shortage of approximately 2.6 million units. This shortfall has contributed to a significant increase in home prices, with the inflation-adjusted cost of an average Canadian home doubling since the early 2000s due to high demand and limited supply.

To tackle the issue, the government has made moves to reduce immigration, which is seen as a way to decrease housing demand. Last year, the Trudeau administration cut its permanent immigration targets by over 20%, lowering the annual goal from 500,000 to fewer than 395,000. Temporary immigration targets were also reduced from 6.2% to 5% of the population. Carney's 2025 budget continues this trend, proposing a further reduction in temporary immigration by 25% to 32% over the coming years. This slowdown in immigration has already led to a decrease in rental prices across the country. However, experts note that new immigrants typically do not purchase homes until several years after their arrival, meaning the impact on home sales and prices may take time to materialize.

Despite the immigration cuts, critics emphasize that the real solution lies in increasing housing supply. Currently, Canada averages about 250,000 housing starts per year, which is insufficient to meet demand. The new budget introduces the "Build Canada Homes" initiative, allocating $7.28 billion over five years to primarily construct non-market affordable housing. This investment averages approximately $1.46 billion annually, which is only half of what the Liberal government promised during the recent election campaign.

The budget aims to build 45,000 units, including at least 4,000 factory-built homes, with much of the development planned for public land. An additional $1 billion is earmarked for transitional and supportive housing for the homeless and those facing housing insecurity. However, the effectiveness of previous housing initiatives raises concerns. The Rapid Housing Initiative (RHI), for instance, aimed to create over 12,000 affordable units for $3.84 billion from 2020 to 2024 but has only completed 8,981 units to date.

Affordable housing programs have been criticized for their high costs and low output. The RHI, for example, produced an average of 2,245 units per year at a cost of $240,000 per unit. If similar costs apply to the Build Canada Homes initiative, it could potentially deliver around 30,000 units over the next five years, addressing only about 1.2% of Canada's housing needs. Even with a hypothetical reduction in costs, the output would still be minimal.

While the new budget may provide some assistance to low-income Canadians, the majority of homebuyers will continue to depend on the regular housing market. Critics argue that if the federal government were genuinely committed to solving the housing crisis, it would need to focus on broader solutions that address the underlying issues of supply and affordability, including municipal development charges that contribute to rising costs.