How Canada Fell Behind the World on Housing Affordability

Canada is amazing at being bad at creating affordable housing. Like, really good at being really bad.

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Nov 05, 2025

This week on The Missing Middle, Mike Moffatt and Sabrina Maddeaux bust some myths and look at Canada’s role in the global housing scene.

Using new OECD data, Mike and Sabrina explain why Canada’s housing affordability problem is worse than in most other countries, with home prices rising more than 100% faster than incomes since 1999. They discuss how policy failures, rapid population growth, and the financialization of housing have made things especially tough for Canadians, and why it’s time to stop claiming this is just a “global trend.”

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Below is an AI-generated transcript of the Missing Middle podcast, which has been lightly edited.

Mike Moffatt: So Sabrina, a big part of my day job is doing policy research, on Canada’s housing crisis, and one of the frustrations I have, and boy, there’s a lot of frustrations, but one in particular is how often many baby boomers and Gen Xers say things that are designed to suggest that our housing problems aren’t as large as we think they are. That the whole thing is either just made up or overblown.

So I thought we’d play a little game today. I’m going to tell you the most common things I hear from Canadians over 50 regarding the housing crisis. I’d like to get your reaction as a millennial who’s living the housing crisis.

So, are you ready for our first-ever game of “react to the boomer comment?”

Sabrina Maddeaux: Let’s do it.

Mike Moffatt: Okay, so comment number one, and I’ve heard this quite a bit, is:

“Well, yeah, sure, home prices are high right now, but you kids, you don’t know the pain of 22% interest rates.”

What’s your reaction to that?

Sabrina Maddeaux: I hear this a lot, too. Well, 22% interest rates were on home prices that were much lower and much more in line with incomes. So the principle now is way higher because the distortion between what people actually earn and what a home costs is out of control. When you have even lower interest rates on a $1 million, $1.5 million, $2 million home, that adds up a lot more over time.

Mike Moffatt: Yeah, absolutely. I don’t want to diminish the experience of those who lived through that era because there were a lot of people who had mortgages that rolled over at much higher interest rates. There was a lot of pain during that time. But I don’t think it’s that helpful when people play this kind of suffering Olympics. It’s like, “Well, I suffered, therefore you have to suffer.” I think we both hear this a lot. Yeah, there’s some truth to the 22% interest rate thing and the hardships that it caused, but it doesn’t mean that we’re not having problems today.

So statement number two:

“Young people don’t want the responsibility of owning a home. They don’t have that 1950s mindset of a lawn and a white picket fence. Sure, we need more apartments, and governments are addressing that problem. And we don’t need to be building more homes on the ground for families.”

Sabrina Maddeaux: Absolutely not true. Young people are living in apartments and small condos because that’s all there is right now. Young people still want single detached homes. They want space for themselves and for their families, and the fact is, there are no options right now.

Mike Moffatt: Yeah, there really aren’t in many parts of Canada. Here’s another one that we hear that’s kind of in a similar vein. (A lot of these are very variations of a theme.)

“We don’t need to build as many or any three- or four-bedroom homes because young people are not interested in having kids these days. And if they are, they only have one. And you can do that in a two-bedroom home. So why do we need more three- and four-bedroom homes?”

Sabrina Maddeaux: Well, young people aren’t having as many children or they’re delaying having children or not having them at all, because they don’t have the space.

Of course, people who are thinking about [becoming] parents want a certain quality of life and practicality to their living spaces, and because that’s not available to them and certainly not affordable, that’s what’s responsible for this drop in our fertility rates.

Mike Moffatt: Yeah, and I think we can often confuse what is a change in culture versus what is a change in economics and understand that the decisions that people make are often driven by their options. If it’s not viable to have more children, they won’t, but it doesn’t necessarily mean that they don’t want them.

Sabrina Maddeaux: Not to mention, if you flip that argument around, “why do boomers who are now empty nesters have to live in three, four, five-bedroom homes in the suburbs?” Maybe they should all move into the small condos.

Mike Moffatt: There is that, yeah, that some generations are expected to change and others not. So, yeah, absolutely. I agree with you there.

Statement four has a very similar theme. You’ll often hear:

“Well, homes in the suburbs are indeed expensive, but just wait until all the baby boomers pass away. We’re going to be absolutely flooded with them. We’re going to have more homes than we know what to do with. And they’re going to be so cheap that they’ll be giving them away in boxes of cereal.”

(Note to boomers and older Gen Xers, prizes in boxes of cereal haven’t been a thing for like 30 years.)

I’ll often hear this, that we just have to wait a little bit, and we’re going to have more homes than we know what to do with.

Sabrina Maddeaux:

If our housing future depends on waiting for people’s parents to die, that’s pretty bleak. Not to mention, boomers are still in their 60s going there. There’s a long lifespan ahead of them, even if you do want to talk about it in this fashion.

Millennials are in their 30s, early 40s. So that would be like a 30-year horizon if this were ever to actually come into play, at which point you’ve lost generations of people being able to have a quality of life and have kids at the same time.

Mike Moffatt: A similar thing that we hear in the same vein:

“Well, yeah, homes are expensive, but these kids, they’re all going to inherit a home. So you don’t even have to go buy one. You’re going to inherit one someday. So why are you so worried about the price of a home when you’re going to be getting one for free or close to it?”

Sabrina Maddeaux: Well, homeownership shouldn’t only be attainable for people whose parents are homeowners. I don’t think that’s the type of system we have in Canada, where we want everything to be based on family wealth and family already owning assets.

At the same time, inheritances aren’t guaranteed. And again, they’re so far off in the future for many people, at which point you will have gone through life not having kids, not having maybe the career you want because you can’t afford to live near work and commute in - so much wasted money, time and stress.

Inheritances are not the solution to the housing crisis.

Mike Moffatt: It’s like, “yeah, you can have a home someday, but you just got to wait for grandma to die.” It’s not a great society.

The final one in our inaugural game, and one that at least acknowledges there’s a problem, more so than the first five, is:

“Yeah, you know what? Homes have gotten out of reach for young families, and they have gotten out of reach for the middle class. But that’s happening everywhere in the world. So we shouldn’t blame Canadian governments, or it’s not a uniquely Canadian problem. The problem is…” and fill in the blank.

They might say global capitalism or neoliberalism or financialization or some big global trend. So they’ll at least acknowledge the problem, but then say, “Stop blaming Canadian governments because this is a global thing. It’s happening everywhere.”

Sabrina Maddeaux: Yeah, this is so misguided on two fronts.

First of all, just because other governments and other central banks and decision makers have made similar poor policy choices as they have in Canada does not let us off the hook.

I mean, apply that to any other problem. You say, “Oh, I have a problem, but everyone else has the same problem, so it’s not a problem.” That doesn’t solve anything for anyone, but at the same time, while affordability is an issue around the world, Canada does have it worse. Our housing crisis is much more advanced than in other places.

The disparity between incomes and wages, our supply shortages, and the way we’ve boosted demand. Canada is an outlier in how bad things have gotten.

Now, Mike, I know you have an ulterior motive for asking that last question because you recently published a piece comparing home prices in Canada to those in other countries on the Missing Middle Substack, and we’ll put a link to that in the show notes, of course. Can you tell me a bit more?

Mike Moffatt: Yeah, absolutely. The piece looks at changes in price-to-income ratios around the world, because we have to understand that affordability is a function of both of those. It’s not just the home price, but it’s the amount of money that you can earn to pay for that home. So the piece looks at those price-to-income changes over time.

The data is from the OECD, and we’ll also put a link in the show notes to the data set itself so you can play around with the data and come up with any conclusions that you want.

The data ends in 2024, so it’s pretty up to date for government data. It theoretically goes back to the 50s or 60s, but a lot of things are missing there for a variety of different reasons. Some of the countries that existed back when I was a kid no longer exist. The data for Yugoslavia, for instance, is a little bit spotty.

What we did was take 13 countries where the data set goes from 1979 to 2024 and has complete data, and we looked at how those 13 countries have performed over time.

One of the big takeaways of the piece is that when you look at housing affordability over time is really sensitive to the choice of endpoints. Like, what time period are you looking at? Are you looking at the last five years versus the last 20 years? Are you looking at any given five-year period?

Yes, there are these periods where home prices get more or less expensive globally over time. The correlation isn’t as strong as you would think it is that some countries get really expensive at one point in time. Some countries go down in other periods of time.

There are individual dynamics, and that’s kind of the first sign that this thesis is wrong. That it’s all getting driven by global factors, by global interest rates or what have you, because these price movements vary a lot from country to country in both magnitude and timing.

Sabrina Maddeaux: Now, the last five years take us to 2019 or just before the start of the pandemic. We know during that time, home prices shot up in value in a way that incomes just didn’t. Was that the case everywhere?

Mike Moffatt: It turns out no, and on average across our 13 countries, home prices rose about 4% more than incomes. So that’s not great. That is less affordable, but it’s not too bad overall.

In Canada, we rose by about 14%, which isn’t great either. Obviously, there’s a lot of regional dynamics here because we are looking country to country, so we’re not considering differences in provinces or anything like that. It was actually only the fourth worst. “Yay, we’re fourth worst out of 13.”

Switzerland was 16%, the US 20%, and Australia 21%. Now, we don’t have data for the UK in here, but it does seem we have Australia, the US, and Canada —all very high-level countries with similar economies.

In four of those 13 countries during this period, homes became more affordable relative to incomes. Even though this was a period where we had this massive drop in global interest rates, which has been blamed, I think not unfairly, as having contributed to high housing unaffordability. Some countries were able to buck that trend, and despite that big drop in interest rates, were able to keep home prices growth in check and actually growing slower than incomes.

Sabrina Maddeaux: Let’s go back 10 years, which roughly covers the time the federal Liberals have been in office. We know housing affordability got much, much worse in Canada over this period, but did it get worse faster in other countries?

Mike Moffatt: So speaking of ulterior motives, you want to know about the federal Liberals, and I’m glad to answer that question. Sadly, yes, it was worse in Canada. It’s not just your imagination. And those who are claiming otherwise are just not supported by the data.

Over those 10 years, on average, across the 13 countries, home prices rose 12% more than incomes. So people aren’t completely wrong in suggesting that there was a global trend here, because there was, but in Canada, they rose by 40%. Put that in context with a home that might have been priced five times income, which is now going up to six, seven, or eight times income because there’s some differentiation between locations and so on. So there’s a massive increase. Switzerland, the US, and Australia were all around the 31% mark. So yeah, Canada was particularly bad at this point. Yes, there was a global trend, but this goes well beyond Canada getting swept up in a global trend. We really do have a unique made-in-Canada problem.

Sabrina Maddeaux: So if we go back 25 years, that takes us now to the start of the 21st century. Does our story change at all?

Mike Moffatt: Now we’re going back to 1999. So now I’m an undergrad. It’s a very, very different world. This year, I think, is particularly important because home prices relative to incomes from 1999 to 2024 are up a whopping 108% over the last 25 years.

That means if you had a home that in 1999 took three times your income to purchase, it now takes six times your income to purchase. So you’re now having to work twice as much or needing that second income to buy the same thing you could have bought in 1999. It’s over doubled. That’s far higher than every other country in our sample.

We all love Canada-US comparisons, though we tend to prefer Canada to be on the good side of them. But relative to the United States during this period, home prices in the US only rose 22% relative to incomes. In Canada, we’re at 108%.

So this really shows you over these longer time periods that there really is something different about Canada. Our home prices are rising much faster than in other countries, and particularly much faster in parts of income.

I should point out that some of that difference between Canada and the United States is not a home price difference; it’s an income difference. That their incomes rose faster than ours did. So you have both a numerator and a denominator, and both are important.

Sabrina Maddeaux: And finally, let’s go all the way back to 1979. Which countries have done well at keeping home prices affordable, and which have not?

Mike Moffatt: There are massive differences here, and that was one of the things we saw in the piece that the further out you go, the bigger and bigger these differences get.

There are four countries of the 13, where homes are actually cheaper relative to incomes than they were in the 1970s. Those countries are Finland, Italy, Japan, and the United States.

Home prices are actually 3% lower today relative to incomes than they were when Jimmy Carter was president. Obviously, there’s been some ups and downs, they’ve had boom-bust cycles, they’ve had... whole price bubbles, financial crisis, and so on.

Over the last 45 years, it’s all netted out; we’re back to where we were. Now, that’s four countries where homes are more affordable than the 1970s. You’ve got four countries on the other side of it where home prices have risen 50% more than incomes. Norway is at 50%, and a lot of that is because of their oil boom. People have a lot of wealth there and so on. Spain is at 60% and Canada is at 109%. (Once again, doubled.)

So we’re not the worst. Australia is actually at 127%. So yay for us. We’re not the worst, so on.

One of the things we don’t look at in the piece is “why.” This piece is just a “what.” It says, “Okay, what happened over the last 45 years, which countries got worse, which got better, is it really true that they all changed at the same rate?” We will be looking at the why question in the future: “Why did we have these changes?”

One thing that particularly jumped out at us is how much Canada and Australia are outliers. We’re not the first to notice this. There have been pieces; there’s a Derek Thompson piece, which we’ll link to in the Substack that looks at these Anglo-American differences, but I’m going to have to research this.

I’m going to, and the MMI team is going to have to look at trying to figure out why these things are different. I’m going to ask you and put you to work. What are the hypotheses I should be testing? What should I be looking at? What theory should I be looking at as to why Canada and Australia are really struggling when it comes to affordability in a way that some of these other countries aren’t?

Sabrina Maddeaux: I have two hypotheses I’d like to put forward.

As we know, housing is the supply-demand balance, and both Canada and Australia really juiced demand, especially in recent years. They did that through huge immigration surges. Both Canada and Australia saw rapid population growth through immigration surges in a way that other peer countries didn’t.

We know that between 2014 and 2023, Canada admitted nearly 3 million new permanent residents and 4.4 million study and work permit holders. In 2023 alone, we saw the population grow by 3.2%. These were huge incoming populations that affected both the rental and the ownership market, and they outpaced our ability to build housing.

Australia’s situation parallels ours. Migration there now counts for roughly three-quarters of their total population growth. Their net migration has also more than doubled pre-pandemic levels, which has caused record rent inflation and housing shortages in their major cities. I think immigration is one of the main explanations.

Also, the financialization and speculative demand in both markets. In the US, because they had the financial crisis back in 2008 to 2010, and a lot of people lost equity, and there was pain, I think that the mentality when it came to “housing being an investment and an asset that only goes up and never comes down, is entirely safe and will always give you huge lottery-like gains forevermore” - they don’t think that way as much because they learned those hard lessons that we didn’t in Canada.

Australia didn’t experience it the same way either. So, because we’ve had such a long record of housing values increasing and increasing and increasing, the psychology is that it’s a guaranteed asset, so it’s always something you want to invest more in and that it’s a vehicle to create wealth. That’s a dangerous psychology that’s really hurt our ability to solve the housing crisis and made it worse over time.

Mike Moffatt: Yeah, I think there’s something to that. I think what we’re going to find is that there is not one thing that explains these differences between countries. It’s a basket of things.

I do think that the theory about Australia and Canada not having the type of correction that we saw in the EU or the United States, there is probably something to that. I know my Australian friends love to tell me that they were the only country that didn’t go into a recession during the financial crisis. Okay, well, that’s a good thing, but maybe there were side effects there.

I do think there are other things that we could be looking at. You get a lot of very similar land use policies, urban growth boundaries, green belts, and zoning policies. You do have more of these community consultations in the Anglo-American countryside.

There’s a lot of things to look at, but it does come back to the central point which is that I really wish people would stop diminishing what’s going on in Canada by saying, “Oh, well, this is a global problem. Home prices are expensive everywhere, and the middle class is struggling everywhere.” There is some truth to it, but we do seem to be having a much worse time in Canada when it comes to housing affordability.

We have to acknowledge reality. We need to put policies into place to create middle-class housing affordability and not just wave it away as these big factors that are outside of our control. Because they’re clearly not. Other countries have been able to create housing affordability for the middle class. We can do it.

Sabrina Maddeaux: Yeah. Admitting you have a problem is the first step, and that we caused this problem for ourselves. Hopefully, that can lead us to solutions and get this fixed.

Thank you so much, everyone, for watching and listening and to our amazing producer, Meredith Martin.

Mike Moffatt: And if you have any thoughts or questions about admitting you have a problem, please send us an email to [email protected].

Sabrina Maddeaux: And we’ll see you next time.