Canadian housing push gains momentum amid new government measures

Canada’s spring economic update builds on a wave of coordinated federal and provincial housing measures—reinforcing a national push to improve affordability and accelerate housing supply.

Housing policy has emerged as a central economic lever in Canada, with governments at various levels pivoting from demand-side stimulus toward supply-side structural reform.

This includes a stronger focus on productivity, supported by $41.9 million over five years to modernize building codes, streamline approvals and accelerate adoption of innovative and prefabricated construction products.

On the financing side, accelerating over $7 billion in low-cost loans for rental housing—to support up to 16,500 units—along with expanding mortgage insurance for “missing middle” housing aims to unlock capital and increase supply.

Economic conditions, meanwhile, continue to point to underutilized capacity and elevated unemployment. These factors suggest that growth remains below potential and create a challenging backdrop for policymakers, who must balance inflation risks with a still-fragile labour market.

Examining recent federal and provincial tax-related measures, along with their potential effects on the real estate sector, can help individuals and businesses navigate the various obstacles and opportunities in the current market.

Notable provincial measures

Several provinces announced tax measures centered around the real estate industry.

Ontario proposed temporary relief to qualifying home purchases by removing the provincial portion of the harmonized sales tax (HST) on new homes. This, coupled with the related federal measure, could provide relief for those purchasing homes up to $1 million.

British Columbia proposed an increase to its speculation and vacancy tax from three per cent to four per cent effective Jan. 1, 2027. The provincial government also proposed expanding the property tax exemption for purpose-built rental housing, allowing developers to lease units for up to 24 months before completion without losing eligibility.

However, these measures may conflict with B.C.’s expansion of its provincial sales tax (PST), effective Oct. 1, 2026, to include rental property and strata management services and commissions related to buying and selling non-residential real estate.

This expansion could stifle efforts to combat housing affordability, as it may increase project costs for developers and real estate operators, particularly when professional services form a significant part of project planning and execution.

Quebec focused its budgetary measures on strengthening oversight in the residential construction industry. In particular, the provincial government proposed enhanced enforcement of tax compliance in the construction sector—with a focus on residential construction activity—and expanded audit and inspection activity by Revenu Quebec with a greater on-site presence at construction and renovation projects. 

Implications for individuals and businesses

Individual homebuyers and landlords could benefit from the enhanced housing rebates and GST relief, although timing and home values will be important.

That said, individual investors in B.C. should consider the effect of the increased vacancy and speculation tax on their investment returns when assessing holding strategies.

For corporations, developers may need to plan for higher project costs where PST applies to professional services and expenses. PST is generally not recoverable and often becomes a direct cost of doing business, unlike GST/HST.

Construction businesses, particularly in Quebec, should anticipate increased oversight by Revenu Quebec and ensure documentation and compliance practices remain up to date.

Large-scale developers may benefit from federal advance rulings for nation-building projects, which could improve planning confidence for complex investments.