Canada's home prices more than doubled since 2005, far outpacing peer nations

OTTAWA · Canada's inflation-adjusted home prices rose 101 percent between 2005 and 2025, more than doubling and exceeding the growth in every comparable nation. The research from Canada Mortgage and Housing Corporation compared Canada's trajectory to 18 peer countries using an international database. It found the primary driver was a long-term structural gap where housing demand consistently outpaced supply, not short-term interest rate changes. Australia, with similar population growth and economic policies, saw a 79 percent increase over the same period.

The United States saw a 30 percent rise, Germany 21 percent, and France 9 percent. The United Kingdom registered just 13 percent growth after a significant price correction during the global financial crisis. "Canada's housing challenge isn't just that home prices rose," said Aled ab Iorwerth, Deputy Chief Economist at CMHC. "It's that demand grew faster than supply for longer than in many comparable countries. Understanding why that happened can help identify the changes needed to improve affordability."

Canada's population grew 29 percent over the two decades, a rate similar to Ireland and New Zealand, but its price growth was far steeper. The country has 426 dwellings per 1,000 people, below the OECD average of 468. That figure is also well behind France at 591, Finland at 574, and Germany at 518. Other nations that saw strong population growth, like Norway and Sweden, began the period with a larger existing housing stock relative to their population.

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New housing construction in Canada has not kept pace. Annual completions represented only 1.2 percent of the existing stock in 2011 and 1.3 percent by 2022. Australia consistently built at a rate of about 1.7 percent over the same period. In most comparator countries, the share of completions grew more than it did in Canada. The gap between new residents and new homes widened sharply after 2021, with Canada adding nearly five new residents for every housing completion in 2023 and 2024.

Ab Iorwerth warned in September that recent affordability gains could reverse. "Although slower population growth has brought some improvements in affordability, new construction is slowing faster than demand," he said. "The key risk now is Canada underbuilds during this softer market and finds itself further short of housing when demand strengthens again." Total housing starts remain below the level needed to restore pre-pandemic affordability. CMHC plans to release a further review examining how other countries managed to scale up construction. That study will look at financial incentives, planning reforms and innovative building methods used abroad to identify strategies that could work in Canada.

With files from Mortgage Professional America