Canada's housing affordability gap could take decades to close, analysis shows
A policy professor says earnings would need 26 years to catch up to current home prices nationally, and far longer in Ontario and B.C.
Canada's housing affordability crisis will not be resolved for decades under current policies, according to a new analysis. The typical young Canadian faces a gap of tens of thousands of dollars between their income and the income needed to afford an average home. This gap means it could take 26 years for earnings to catch up to current home prices nationally, with timelines stretching past 50 years in some cities. Dr. Paul Kershaw, a policy professor at the University of British Columbia and founder of Generation Squeeze, conducted the analysis. He said that even with recent price declines, buying the average Canadian home requires a mortgage of roughly $544,000 after a 20 per cent down payment. Carrying that mortgage while spending less than 30 per cent of income on housing requires an annual income of around $131,000.
The typical 25- to 34-year-old who works full-time earns only $68,500. "Assuming earnings grow at 3.5 per cent annually, roughly the average pace over the past decade, it would take about 26 years for earnings to catch up to current home values nationally," Kershaw wrote. "That means affordability would not be restored until 2052." The timelines are far longer in the most expensive markets. Kershaw's analysis suggests earnings would require approximately 36 years to catch up to home prices in Ontario and 45 years in British Columbia. The wait approaches 48 years in the Greater Toronto Area, 53 years in Victoria, and stretches to 66 years in Metro Vancouver.
Kershaw argues this reality must change the national housing conversation. He said governments have prioritized protecting the housing wealth accumulated by existing owners, while expecting younger Canadians and newcomers to endure higher costs. "The gains were privatized through rising home equity; the costs were socialized through worsening affordability for those not yet owners," he wrote. Housing Minister Gregor Robertson has explicitly rejected the idea that home prices should fall dramatically. Most politicians share a similar instinct, wanting affordability to improve without substantially eroding the home equity of existing owners. Kershaw said this approach takes a long time and leaves a generation in limbo.
He said if younger Canadians are being asked to wait decades, governments should consider stronger support measures. These could include stronger rental assistance, improved student grants, lower student debt, expanded $10-a-day child care, enhanced family benefits or targeted tax relief. "The specific policy choices are open for debate," Kershaw wrote. The issue comes as Canada's National Housing Strategy, a 10-year plan, is poised for renewal in 2027. Kershaw said the conversation must confront the sacrifices younger Canadians are making. "That is the conversation the Carney government must confront when renewing the National Housing Strategy, beginning in the budget scheduled for Nov. 5," he wrote. Kershaw's analysis notes there has been some progress. Adjusted into 2025 dollars, average home values peaked nationally at roughly $801,000 in 2021 and fell to about $680,000 by 2025, a 15 per cent decline. He said Canada must continue building more homes, streamlining approvals, legalizing more density, expanding non-market housing and curbing speculative demand.
With files from The Globe and Mail