Canada’s inflation-adjusted house prices have more than doubled since 2005, rising faster than those in most developed countries as housing demand outpaced supply for an extended period, according to new research from the Canada Mortgage and Housing Corp. (CMHC).
The federal Crown corporation published the research which examines international housing price trends to determine how much of Canada’s affordability challenge reflects broader global developments and how much is attributable to domestic conditions.
The report also points to Canada’s relatively low number of homes per capita, which leaves the country more exposed to affordability pressures as housing demand grows.
Demand and supply pressures
CMHC’s research examines how Canadian house prices have diverged from those in other developed countries and whether the factors behind the increases are part of a wider international trend or more specific to Canada.
Aled ab Iorwerth, CMHC’s deputy chief economist, said the relationship between housing demand and supply is central to understanding the country’s price increases and affordability challenges.
"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. Understanding why that happened can help identify the changes needed to improve affordability."
The research focuses on the factors that have contributed to Canada’s housing market performance relative to other countries, including the pace at which prices have risen and the number of homes available relative to the population.
The findings highlight the importance of examining housing supply alongside price growth when assessing affordability. According to CMHC, Canada’s lower number of homes per capita makes the country more vulnerable to affordability pressures when demand increases.
International comparisons and housing policy
The research compares house price trends across countries to assess whether Canada’s experience reflects developments shared by other advanced economies or conditions more specific to its domestic housing market.
CMHC said understanding the reasons behind the divergence could help identify changes needed to improve affordability. The announcement did not provide further details about specific policy measures or quantify the contribution of individual factors to Canadian house price growth.
The corporation, a federal Crown corporation, provides housing finance solutions, including mortgage loan insurance and securitization, and produces housing data, research and market analysis to inform policy and decision-making.
CMHC said it has supported Canada’s housing markets for more than 80 years through its work in housing finance and market research.
The full research article is available on the CMHC website