Mortgage Broker

Housing supply has struggled to keep pace with demand across Canada. In response, many cities are introducing zoning changes to support small-scale infill, speed up approvals and encourage more housing. This CMHC analysis finds that small-scale infill is becoming a more important source of housing supply. How much it adds will depend on zoning changes and financial viability.

Key Findings

• Small-scale infill is increasing as a share of housing starts: Small-scale infill is now estimated to account for 1 out of every 10 housing starts in Canada in 2025. While most new housing is still built through larger developments, small-scale infill is playing a growing role.
• Zoning changes can produce upward shifts in supply: Vancouver, Edmonton and Toronto have eased zoning rules at scale. Between 2023 and 2025, the share of new housing coming from small-scale infill in these cities rose from 4.7% to 16.1%. While many factors shape housing construction, this increase suggests zoning reforms have contributed.
• Broader market and development conditions still shape infill growth: Broader market and development conditions will still shape the growth of small-scale infill. Fees, approval timelines, building rules and financing all affect whether projects can move forward.

The Bank of Canada today increased its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.

Since the July Monetary Policy Report, global economic activity has remained resilient, despite higher energy prices. In the United States, the economy continues to grow at a robust pace, supported by consumer spending and AI-related investment. Growth in the euro area has been resilient and broad-based. After slowing in the second quarter, Chinese growth rebounded in the third quarter, owing to strength in exports and a pickup in fiscal spending. With persistently elevated oil prices and refinery margins, inflation has risen in most countries. 

Given the ongoing resilience of the global economy, the Bank has revised up global GDP growth slightly to 3.1% in 2026, while growth in 2027 and 2028 remains unchanged from the July projection at 3.2%.

Global financial conditions have tightened since July. Advanced economy sovereign bond yields are higher. Equity and credit markets have been volatile due to uncertainty about the outlook for the AI sector. The Canadian dollar had weakened somewhat on US-dollar strength but has since recovered to around 71 cents – the same as assumed in the July Report.

In 2024, 23.2% of Canadian households lived in housing unaffordable to them—defined as spending 30% or more of their income on shelter costs—up from 22.0% in 2022. Renters (33.7%) were more likely than owners (17.4%) to live in unaffordable housing. This gap has been stable since 2018, the first cycle of this survey.

In 2024, over one-third (36.6%) of households in Canada were homeowners with a mortgage, 27.8% were homeowners without a mortgage, and 31.3% were renters in the private market. More than one-quarter (26.1%) of homeowners with mortgages lived in unaffordable housing, up from 23.6% in 2022. This drove the overall increase in the share of households in unaffordable housing, as renters living in market rental units saw no change in their unaffordability rate over the same period.

These results are from the 2024 Canadian Housing Survey, which collects information about housing needs and experiences from a sample of Canadian households across the 10 provinces. The survey is undertaken as a collaboration between Statistics Canada and the Canada Mortgage and Housing Corporation.