Economy
Canada can’t have fast population growth, housing supply constraints, and housing affordability
From the MacDonald Laurier Institute
By Steve Lafleur
No one wants to solve the housing crisis enough to make the hard choices.
It’s tempting to try to have it all and policymakers are not immune to this. There are tradeoffs in everything. Ignoring those tradeoffs might work for awhile, but eventually reality catches up to you. Try as we might, we can’t have it all.
For instance, we can’t have rapid population growth, housing supply constraints, and housing affordability all at the same time. We’ll call this the housing affordability trilemma.
The idea of a policy trilemma comes from the Mundell-Fleming model which is included in most introductory economics textbooks. The model was named after Canadian economist Robert Mundell and British economist Marcus Fleming, who developed the idea in the early 1960s. The basic premise of the model, also called the “impossible trinity” or “trilemma” is that you can have two of three policies, but not all three (namely, free capital flow, a fixed exchange rate, and a sovereign monetary policy).
The idea of an impossible trinity can and has been applied to other situations, like the euro crisis in the early 2010s, and provides a useful way of looking at seemingly intractable problems. Plotting the related problems on a Venn Diagram helps visualize the problem. Here is the Mundell-Flemming model, visualized.
(Source: Author’s creation, graphic recreated)
Now, let’s return to housing policy. Few Canadian problems are as intractable as the now nationwide housing affordability crisis. Rents are rising quickly, apartment availability is falling, and home prices are the highest relative to incomes in the G7. As we’ve shown in a recent paper for the MacDonald Laurier Institute, Canada’s population growth is outstripping housing growth. This, unsurprisingly, has undermined housing affordability. Let’s visualize this trilemma.
(Source: Author’s creation, graphic recreated)
At the root of Canada’s housing woes is a severe shortage of homes relative to the number needed. We simply don’t build enough homes to adequately house current and future Canadians.
Not only is there cross-party consensus that there’s a housing shortage, but most parties in provincial and federal elections have proposed policies aimed at addressing it. So why do we still have a shortage?
Let’s go through the elements of the Canada’s housing trilemma (or housing impossibility trinity).
The first element is a fast-growing population. Canada has the fastest growing population in the G7, and last year alone grew by more than a million people. Barring any major shifts in immigration policy, this trend is unlikely to change any time soon. Indeed, the population grew by 430,635 in the third quarter of 2023. That’s the highest quarterly growth rate since 1957.
The second element is restrictions on homebuilding. Whether intended or not, a suite of policies processes and regulations that prevent or limit the addition of more homes both in existing neighbourhoods and at the urban fringe. Barriers to density include local zoning bylaws, lengthy and uncertain consultation processes, and growth plans that exclude building or upgrading the infrastructure necessary to enable more homebuilding in existing neighbourhoods. Policies explicitly preventing the addition of homes outside of existing neighbourhoods include Ontario’s Greenbelt and British Columbia’s Agricultural Land Reserve, while softer versions include local planning targets limiting the share of development slotted to occur on city outskirts. Given these limitations, it’s no surprise that we’ve rarely surpassed 200,000 housing completions annually since the 1970s, while the rate of population growth has reached generational highs.
The third element is housing affordability. That is, the ability for individuals and families earning local incomes to comfortably meet their housing needs. This means shelter costs don’t prevent them from feeding and clothing themselves, but also allow saving and investing in an education, for instance. For example, some peg the cut-off for affordability at 30 percent of income. By that measure, a household would require an income of over $100,000 to afford a one-bedroom apartment in Vancouver, for example.
Whether we like it or not, we can’t have fast population growth, rigid housing supply constraints, and housing affordability all at the same time.
For most of our recent past, the choice we’ve collectively made is to accelerate population growth while maintaining many (if not most) restrictions on both outward and upward growth, meaning we’ve excluded the possibility of achieving broad affordability. The consequences? All the symptoms mentioned before: rising rents, falling vacancies, higher ownership costs.
Despite recent pivots by a growing number of local and provincial governments, the balance of housing and land-use policies remains firmly tilted against reaching the level of homebuilding we need to restore some semblance of affordability, which by some estimates means more than doubling homebuilding. To wit, housing construction has remained remarkably stagnant—even slightly declining—in recent decades. Even the bold changes to zoning recently passed in British Columbia, Ontario and Nova Scotia are unlikely to double the number of housing built provincewide.
But, as the housing trilemma suggests, there are alternative routes. If Canadians remain adamant about affordability, we can demand more meaningful reduction or removal of policies preventing a growth in housing supply, or we can demand a reduction in population growth, or both. These are not easy choices but ignoring them doesn’t make them go away. We need to build upwards, outwards, or both, in order to meaningfully increase housing production. We can’t say no to every solution and expect better results.
The point is, there’s broad consensus that Canada faces a housing crisis, and that major policy actions are needed to fix the problem. There’s also a tacit consensus that the policies feeding the crisis should remain in place.
To put it more bluntly, everyone wants to solve the housing crisis, but no one wants to solve the housing crisis enough to make the hard choices. Until we collectively shift our priorities, we are choosing to sacrifice housing affordability. We can’t have it all. If we insist on maintaining fast population growth and restrictions on supply, we’ll get the broken housing market we deserve.
Steve Lafleur is a public policy analyst who researches and writes for Canadian think tanks.
From Resource Works
Gitxaala has changed all the ground rules in British Columbia reshaping the risks around mills, mines and the North Coast transmission push.
The British Columbia Court of Appeal’s decision in Gitxaala v. British Columbia (Chief Gold Commissioner) is poised to reshape how the province approves and defends major resource projects, from mills and mines to new transmission lines.
In a split ruling on 5 December, the court held that British Columbia’s Declaration on the Rights of Indigenous Peoples Act makes consistency with the United Nations Declaration on the Rights of Indigenous Peoples a question courts can answer. The majority went further, saying UNDRIP now operates as a general interpretive aid across provincial law and declaring the Mineral Tenure Act’s automatic online staking regime inconsistent with article 32(2).
University of Saskatchewan law professor Dwight Newman, who has closely followed the case, says the majority has stretched what legislators thought they were doing when they passed the statute. He argues that section 2 of British Columbia’s UNDRIP law, drafted as a purpose clause, has been turned from guidance for reading that Act into a tool for reading all provincial laws, shifting decisions that were meant for cabinet and the legislature toward the courts.
The decision lands in a province already coping with legal volatility on land rights. In August, the Cowichan Tribes title ruling raised questions about the security of fee simple ownership in parts of Richmond, with critics warning that what used to be “indefeasible” private title may now be subject to senior Aboriginal claims. Newman has called the resulting mix of political pressure, investor hesitation and homeowner anxiety a “bubbling crisis” that governments have been slow to confront.
Gitxaala’s implications reach well beyond mining. Forestry communities are absorbing another wave of closures, including the looming shutdown of West Fraser’s 100 Mile House mill amid tight fibre and softwood duties. Industry leaders have urged Ottawa to treat lumber with the same urgency as steel and energy, warning that high duties are squeezing companies and towns, while new Forests Minister Ravi Parmar promises to restore prosperity in mill communities and honour British Columbia’s commitments on UNDRIP and biodiversity, as environmental groups press the government over pellet exports and protection of old growth.
At the same time, Premier David Eby is staking his “Look West” agenda on unlocking about two hundred billion dollars in new investment by 2035, including a shift of trade toward Asia. A centrepiece is the North Coast Transmission Line, a grid expansion from Prince George to Bob Quinn Lake that the government wants to fast track to power new mines, ports, liquefied natural gas facilities and data centres. Even as Eby dismisses a proposed Alberta to tidewater oil pipeline advanced under a new Alberta memorandum as a distraction, Gitxaala means major energy corridors will also be judged against UNDRIP in court.
Supporters of the ruling say that clarity is overdue. Indigenous nations and human rights advocates who backed the appeal have long argued that governments sold UNDRIP legislation as more than symbolism, and that giving it judicial teeth will front load consultation, encourage genuine consent based agreements and reduce the risk of late stage legal battles that can derail projects after years of planning.
Critics are more cautious. They worry that open ended declarations about inconsistency with UNDRIP will invite strategic litigation, create uncertainty around existing approvals and tempt courts into policy making by another name, potentially prompting legislatures to revisit UNDRIP statutes altogether. For now, the judgment leaves British Columbia with fewer excuses: the province has built its growth plans around big, nation building projects and reconciliation framed as partnership with Indigenous nations, and Gitxaala confirms that those partnerships now have a hard legal edge that will shape the next decade of policy and investment.
Resource Works News
From the Fraser Institute
By Jake Fuss and Grady Munro
The number of Canadians donating to charity—as a percentage of all tax filers—is at the lowest point in 20 years, finds a new study published by the
Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“The holiday season is a time to reflect on charitable giving, and the data shows Canadians are consistently less charitable every year, which means charities face greater challenges to secure resources to help those in need,” said Jake Fuss, director of Fiscal Studies at the Fraser Institute and co-author of Generosity in Canada: The 2025 Generosity Index.
The study finds that the percentage of Canadian tax filers donating to charity during the 2023 tax year—just 16.8 per cent—is the lowest proportion of Canadians donating since at least 2003. Canadians’ generosity peaked at 25.4 per cent of tax-filers donating in 2004, before declining in subsequent years.
Nationally, the total amount donated to charity by Canadian tax filers has also fallen from 0.55 per cent of income in 2013 to 0.52 per cent of income in 2023.
The study finds that Manitoba had the highest percentage of tax filers that donated to charity among the provinces (18.7 per cent) during the 2023 tax year while New Brunswick had the lowest (14.4 per cent).
Likewise, Manitoba also donated the highest percentage of its aggregate income to charity among the provinces (0.71 per cent) while Quebec and Newfoundland and Labrador donated the lowest (both 0.27 per cent).
“A smaller proportion of Canadians are donating to registered charities than what we saw in previous decades, and those who are donating are donating less,” said Fuss.
“This decline in generosity in Canada undoubtedly limits the ability of Canadian charities to improve the quality of life in their communities and beyond,” said Grady Munro, policy analyst and co-author.
Generosity of Canadian provinces and territories
Ranking (2025) % of tax filers who claiming donations Average of all charitable donations % of aggregate income donated
Manitoba 18.7 $2,855 0.71
Ontario 17.2 $2,816 0.58
Quebec 17.1 $1,194 0.27
Alberta 17.0 $3,622 0.68
Prince Edward Island 16.6 $1,936 0.45
Saskatchewan 16.4 $2,597 0.52
British Columbia 15.9 $3,299 0.61
Nova Scotia 15.3 $1,893 0.40
Newfoundland and Labrador 15.0 $1,333 0.27
New Brunswick 14.4 $2,076 0.44
Yukon 14.1 $2,180 0.27
Northwest Territories 10.2 $2,540 0.20
Nunavut 5.1 $2,884 0.15
NOTE: Table based on 2023 tax year, the most recent year of comparable data in Canada
Generosity in Canada: The 2025 Generosity Index
- Manitoba had the highest percentage of tax filers that donated to charity among the provinces (18.7%) during the 2023 tax year while New Brunswick had the lowest (14.4%).
- Manitoba also donated the highest percentage of its aggregate income to charity among the provinces (0.71%) while Quebec and Newfoundland and Labrador donated the lowest (both 0.27%).
- Nationally, the percentage of Canadian tax filers donating to charity has fallen over the last decade from 21.9% in 2013 to 16.8% in 2023.
- The percentage of aggregate income donated to charity by Canadian tax filers has also decreased from 0.55% in 2013 to 0.52% in 2023.
- This decline in generosity in Canada undoubtedly limits the ability of Canadian charities to improve the quality of life in their communities and beyond.
Jake Fuss
Director, Fiscal Studies, Fraser Institute
Grady Munro
Policy Analyst, Fraser Institute
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