Canada's election of the Liberal Party and Mark Carney, a former chair of property investor Brookfield Asset Management and one-time head of the Bank of Canada and Bank of England, to continue as prime minister could lead to changes in housing policy as the country faces affordability and supply challenges.
Carney and the Liberals won Monday's battle with the Conservatives and leader Pierre Poilievre and two smaller parties, but Carney failed to capture a majority of the seats in Parliament. That could leave in limbo some of his proposed policy, including a plan he said would add 500,000 new homes a year to make residential property more affordable.
"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," said Carney in a victory speech.
The election left him with 168 of the 343 seats in the House of Commons and once again dependent on the left-wing New Democrat Party to pass legislation. The Liberal platform included several proposals that would affect real estate, including dropping the goods and services tax, or GST, on homes under $1 million for first-time purchasers and providing over $25 billion, mainly in debt financing, as a contractor for the construction of affordable housing, according to a CIBC report.
On the housing supply side, Canada Mortgage and Housing Corp., or CMHC, the Crown Corporation that advises the federal government on policy, said the country needs an additional 3.5 million homes beyond the present pace of construction by 2030. The CMHC said there were 227,697 units, including all housing classes, started in 2024, compared to 223,513 in 2023.
While the Crown corporation has said the country is capable of 400,000 starts a year, Carney upped that target to 500,000.
"The next government will shape everything from development pipelines to financing, taxation and rental demand," said Derek Lobo, CEO and broker of record at SVN Rock Advisors Inc., in an email.
Coalition likely needed
If Carney and the Liberal Party can persuade the New Democrats to join them on certain issues, the Liberals could have enough seats to push through legislation.
The New Democrats, whose leader Jagmeet Singh resigned after the loss, will have seven seats, also enough to push through legislation if it joined with the Liberal Party. The Conservatives, who received just over 41% of the popular vote to the Liberals' 43.5%, had 144 seats as of Tuesday morning, with the separatist Bloc Quebecois capturing 23 seats in Quebec.
"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," said Avery Shenfeld, chief economist at CIBC, 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.
Carney called for the snap election after taking the helm of the Liberal Party following the resignation of Justin Trudeau, who stepped down in January amid plummeting popularity.
His election as leader of the Liberal Party now means he will become Prime Minister after the party's showing. In January the odds looked slim for a Carney victory, but President Donald Trump in the United States after his inauguration that month began imposing tariffs, shifted that policy and made references to annexing Canada and making it his nation's 51st state. Those moves helped turn the Canadian election into a pseudo referendum on who was better suited to lead the country in the tariff battles with the Trump administration.
With economic issues at the forefront, ultimately voters went to central banker Carney over Poilievre, a veteran of two decades in office who was leading the party into election for the first time. Poilievre appeared to be losing his own seat as of Tuesday, but he vowed to remain leader.
Trump waded into the vote on Election Day with a post on his Truth Social account.
"Good luck to the Great people of Canada. Elect the man who has the strength and wisdom to cut your taxes in half, increase your military power, for free, to the highest in the World," said Trump, in the post that seemed to encourage Canadians to become the 51st state. No such issue was on the ballot.
Interest-free home loans
Bloc Quebecois Leader Yves-Francois Blanchet had also jumped into the sovereignty debate during the campaign, calling Canada "an artificial country with very little meaning."
Although Bloc Quebecois seats declined to 23 from the 35 seats won in the previous federal election, the total is expected to be sufficient to influence legislation in the minority-led Parliament.
Blanchet said this week he wants the federal government to provide interest-free federal loans of $20,000 to first-time homebuyers and to allow parents to transfer funds from their registered retirement savings accounts without penalty to help their children buy a home.
The Quebec leader also seeks a sales tax exemption on the first $700,000 on the purchase of a new home as well as on such associated costs as inspections and notary fees.
Liberals also have plans for large-scale infrastructure initiatives to facilitate the movement of people and goods and the electricity grid. The party is targeting a balanced budget on operating spending but not capital spending.
Canadian real estate executives who weighed in on the result on social media following the election included Adrian Rocca, who controls a $9 billion portfolio of real estate as founder and chief executive at Fitzrovia Real Estate.
Rocca applauded the Liberal Party’s promise to revive the Multiple United Rental building tax incentive and its vow to reduce development charges imposed by municipalities.
However he also expressed misgivings.
“I remain deeply concerned about the creation of a centralized Build Canada Homes entity," Rocca said in a LinkedIn post. "More bureaucracy is not the answer. Builders build homes, bureaucracies build bottlenecks."