Canada’s housing crisis deepens as land-use policies push prices beyond reach

Vancouver, Toronto, Montreal among the world’s least affordable housing markets, says international report

Canada’s housing affordability crisis has worsened, with no major market rated affordable and several ranked among the least affordable in the world, according to a new international report.

The Demographia International Housing Affordability 2025 report by Wendell Cox, published by the Frontier Centre for Public Policy and the Urban Reform Institute, ranks 95 housing markets across eight countries using the “median multiple,” which compares the median house price to the median household income—essentially, how many years of income it would take to buy a home. A ratio of 3.0 or below is considered affordable. Canada’s national median multiple is now 5.4, placing it in the severely unaffordable category.

Among the six Canadian cities included in the report, three are rated severely or impossibly unaffordable, two are seriously unaffordable, and one is moderately unaffordable.

Wendell Cox

Vancouver (11.8) ranks as the fourth least affordable market globally, behind Hong Kong (14.4), Sydney (13.8) and San Jose (12.1). It is classified as impossibly unaffordable—three times the level considered affordable.

Toronto (8.4) ranks 84th out of 95 markets and is severely unaffordable. Montreal (5.8). Calgary (4.8) and Ottawa–Gatineau (5.0) are considered seriously unaffordable. Edmonton (3.7) is rated moderately unaffordable, the most affordable major Canadian city in the report.

The report attributes Canada’s deteriorating housing affordability to restrictive land-use policies, especially in Ontario and British Columbia. These include urban containment strategies (policies that limit how far cities can grow outward), such as greenbelts, zoning limits and densification rules. While intended to limit sprawl and support sustainability, these measures have created artificial land shortages, increased housing costs and made it commercially unfeasible to build the detached homes many families prefer.

As affordability worsens in Toronto and Vancouver, nearby smaller cities, including Kelowna, Chilliwack, London, Guelph and Kitchener–Cambridge–Waterloo, are seeing sharp price increases. From 2015 to 2023, affordability declined by 2.5 years of income in smaller B.C. markets and by 3.3 years in mid-sized Ontario cities. In comparison, affordability dropped by 1.2 years in Vancouver and 2.6 years in Toronto.

“These numbers reflect the ripple effect of unaffordability spreading outward from Canada’s largest cities,” Cox said.

Canada’s largest urban centres—census metropolitan areas—lost nearly 275,000 domestic migrants between 2019 and 2023, as people relocated to smaller cities, towns and rural areas in search of more affordable housing and a better quality of life.

Governments continue to promote densification as a solution, but the report argues it isn’t enough.

“Building more high-density units won’t solve the problem if land prices remain artificially inflated by growth boundaries and zoning constraints,” the report says.

The report points to New Zealand’s Going for Housing Growth initiative, launched in 2023, as a potential model. It expands suburban land supply by lifting restrictions on greenfield development—the construction of housing on previously undeveloped land—and uses long-term financing to fund infrastructure without overburdening taxpayers.

Without similar reforms, the report warns, housing affordability will continue to erode and place greater economic pressure on middle-income households.

“Canada’s middle class is being squeezed out of homeownership,” said Cox. “Unless land-use rules change, that trend is unlikely to reverse.”

Despite years of debate and political pledges, the affordability gap keeps growing. In 1971, the difference between Canada’s most and least affordable markets was 1.5 points on the median multiple scale. By 2024, the gap had widened to 8.1 points—the equivalent of 6.6 years of household income.

As housing costs climb, younger Canadians and working families face mounting barriers to homeownership, worsening inequality, social stress and urban decline. For many, it means putting off starting a family, living with parents longer or leaving their hometowns entirely.

| News Desk