Canadian house prices have more than doubled since 2005, outpacing most developed countries as population growth, rising incomes and low borrowing costs pushed housing demand ahead of construction, according to new research from Canada Mortgage and Housing Corporation (CMHC).

The report, released Oct. 20, examines why Canadian house prices have risen more sharply than those in comparable countries, finding that the country’s relatively limited housing stock and prolonged imbalance between supply and demand have contributed to worsening affordability.

Canada also has fewer homes per capita than most of its international peers, potentially making the country more vulnerable to rising demand.

“Canada’s housing challenge isn’t just that home prices rose. It’s that demand grew faster than supply for longer than in many comparable countries,” said Aled ab Iorwerth, CMHC’s deputy chief economist, in a statement.

 

Canada stands apart from international peers

 

CMHC found that Canada, Australia and Sweden experienced relatively modest housing market declines during the 2008-2009 global financial crisis, followed by sustained price growth through 2022.

The United States and United Kingdom, meanwhile, experienced significant corrections before their markets began recovering around 2012. France and Germany recorded more moderate growth, while Italy and Japan experienced extended periods of stagnant or declining prices.

Even if Canada had experienced a correction comparable to the United States during the financial crisis, CMHC estimates its house prices would still rank among the fastest-growing in its international comparison.

Population growth helps explain some of the difference, but not all of it.

Canada, Australia, New Zealand, Norway and Sweden experienced similar economic conditions and strong population growth over the past two decades, yet Canada recorded the steepest increase in inflation-adjusted house prices among that group after accounting for population growth.

The report also found that urbanization alone cannot explain Canada’s trajectory. Despite being slightly less urbanized than Australia, Norway and Sweden, Canada experienced stronger house price growth.

 

Population growth outpaces construction

 

Since the second half of the 2010s, Canadian housing demand has increasingly outpaced supply, driven by population growth, higher incomes and low interest rates.

“Rapid population growth is only part of the story: demand was also supported by higher incomes and lower interest rates,” the report states.

Canada’s annual housing construction remained relatively stable as a share of its existing housing stock, increasing from 1.2 per cent in 2011 to 1.3 per cent in 2022.

 

 

Although both figures exceeded the Organisation for Economic Co-operation and Development (OECD) average, 11 of 17 comparator countries recorded larger increases in their construction rates over that period.

Australia consistently maintained a higher housing supply growth rate of approximately 1.7 per cent, while Ireland and New Zealand also recorded stronger increases.

The gap between population growth and housing completions in Canada widened considerably after 2021.

In 2023 and 2024, the country added nearly five new residents for every home completed, compared with a lower peak in Australia and a ratio below one in Sweden.

That Canadian ratio has since fallen sharply to approximately 1.53, which CMHC suggests may reflect subsequent changes in immigration levels.

 

Fewer homes per capita

 

Canada also has fewer dwellings per 1,000 residents than most comparable countries and the OECD average.

CMHC suggests countries such as Sweden and Norway may have been better positioned to absorb population growth because they entered the period with larger housing stocks relative to their populations.

“Canada’s house prices have risen faster and more persistently than in most comparable countries,” the report concludes.

CMHC plans to release a separate review examining how 10 countries have successfully increased housing construction, including through financial incentives, planning reforms, construction innovation and the use of public land.