Liberal agenda includes tax relief and affordable housing push, but needs political backing
Mark Carney is set to lead Canada as prime minister after a closely watched federal election win, and for the housing market, that could mean big policy changes — if his minority government can bring them to life.
Carney and the Liberals won a closely contested race on Monday, taking 168 of the 343 seats in the House of Commons. Although that places them ahead of the Conservatives, led by Pierre Poilievre, it falls short of the 172 seats needed for a majority. The result means the Liberals must now seek support from the New Democratic Party (NDP), which holds seven seats after leader Jagmeet Singh stepped down following the party’s losses.
“Canada is more than a nation. We are, and we always will be a confederation, a sacred set of ideas and ideals based on practical foundations,” Carney said in his victory speech.
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His win marks a dramatic reversal from earlier this year, when polls showed a strong lead for Poilievre. That lead eroded as US president Donald Trump imposed tariffs and made provocative comments suggesting Canada could be annexed as America’s “51st state.”
Trump’s remarks, including a post on election day urging Canadians to “elect the man who has the strength and wisdom to cut your taxes in half,” helped turn the vote into a symbolic test of leadership and sovereignty.
Carney’s housing promises
Carney now faces pressure to act on a platform that included several significant housing measures. He pledged to deliver 500,000 new homes per year — a goal that exceeds the 400,000 units per year that Canada Mortgage and Housing Corporation (CMHC) says is feasible.
CMHC data showed 227,697 housing starts in 2024, up slightly from 223,513 in 2023, but still far short of the 3.5 million homes the agency says are needed by 2030 to restore housing affordability.
The Liberal housing plan includes dropping the goods and services tax (GST) on homes under $1 million for first-time buyers, as well as providing over $25 billion, mostly in debt financing, to fund affordable housing development. The platform also proposes creating a new federal entity, Build Canada Homes, which would act as a contractor to oversee construction.
Adrian Rocca, CEO of Fitzrovia Real Estate, praised the Liberals’ commitment to reviving the Multiple Unit Rental Building (MURB) tax incentive and reducing municipal development charges.
But he expressed skepticism about federal overreach, writing in a LinkedIn post: “I remain deeply concerned about the creation of a centralized Build Canada Homes entity. More bureaucracy is not the answer. Builders build homes, bureaucracies build bottlenecks.”
Economists expect budget deficits to rise under the new government.
“Budget deficits look likely to head higher in the near term, as would typically be the case when an economic shock, in this case from trade frictions, hits revenues and prompts fiscal stimulus measures,” CIBC chief economist Avery Shenfeld wrote in a note. “Deficits are likely to exceed somewhat what the Liberals suggested during the campaign, while still tracking miles below the United States’ federal deficits as a share of gross domestic product.”
Housing industry reacts
Other industry leaders responded more positively.
“Prime Minister Carney’s leadership comes at a pivotal time for Canada, as the country faces significant challenges, including the US trade disruption and ongoing concerns around housing affordability and supply,” said Elechia Barry-Sproule, president of the Toronto Regional Real Estate Board (TRREB). “TRREB is encouraged by the Liberal Party’s commitment to addressing the housing crisis, and we look forward to working collaboratively with the new government to implement solutions that increase housing supply, streamline development approvals, and improve access to homeownership.”
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CREA chair Valérie Paquin also emphasized the urgency of action, saying, “The need and urgency to fix Canada’s housing crisis goes beyond political stripes. We continue to advocate for a vibrant and resilient housing system in Canada and look forward to working with this new government in the implementation of effective solutions that support the entire housing continuum.”
Construction industry body, the Residential and Civil Construction Alliance of Ontario (RCCAO), highlighted the need for federal tax reform to address affordability.
“The housing and affordability crisis in Canada are deeply intertwined, and the Federal government is uniquely positioned to act to help alleviate these challenges,” executive director Nadia Todorova said. “One-third of the cost of housing is taxation, with the Federal tax burden making up the largest share. The Federal government must reduce this tax burden quickly and meaningfully.”
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