As condominium sales across Canada fall to their lowest levels in decades, what if unsold units could be repurposed for the public good?
Governments should purchase and convert them into much-needed social housing, which includes public, social and co-operative housing, where rents are set at no more than 30 per cent of a tenant’s income.
Toronto and Vancouver face the largest glut of new condos still looking for buyers, with an estimated 20,000 listings in Toronto and 2,500 in Vancouver across all stages of development.
The federal and Ontario governments have introduced a number of incentives to attract condo buyers, including a one-year break on the 13-per-cent HST on new homes priced up to $1 million. The Ontario program offers rebates up to $130,000 for homes valued up to $1.5 million, as well as measures allowing municipalities to eliminate development charges.
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However, these measures — which will cost the federal and provincial governments more than $2 billion — are misplaced and are only making the housing-affordability crisis worse. They are designed to entice Canadians to take on more mortgage debt in order to save a floundering condo market in a country where average household debt is already the highest in the G7.
Developers and investors are not facing an affordability crisis, yet governments are treating them as if they are — shifting costs onto taxpayers to protect the profit margins of private interests.
The players best positioned to benefit from these measures — developers, corporate landlords and institutional investors — are already starting to use these incentives to acquire unsold condos at depressed prices to turn a profit when the market rebounds. One Montreal-based company recently announced its plan to buy up $500 million worth of unsold condos in Toronto.
Why should governments spend billions of taxpayer dollars subsidizing private investors? And where are the incentives to persuade developers to convert such units into purpose-built rentals or even affordable housing?
The federal government and the provinces should be using that money to purchase unsold condos and presale contracts and turn them into badly needed social housing. It makes more sense to waive the HST specifically for units designated as social housing rather than offer blanket tax breaks to a wide swath of private buyers, many of whom do not need assistance from tax dollars.
The new federal agency Build Canada Homes (BCH) — launched in September 2025 — is well suited to acquire, develop and lease land to fulfill its mandate of accelerating the constructon of affordable housing across the country. This could be acquiring a suite of condo units or entire condo buildings and selling or leasing them to co-operatives and non-profit housing providers. BCH can also work with municipalities to support acquiring, renovating and refinancing condos for social housing.
The emphasis on social housing — rather than affordable housing — is crucial.
Unlike social housing, affordable housing could mean privately managed units in a large condominium complex, perhaps with reduced amenities like smaller gyms and common spaces, or sometimes with separate entrances for owners and market renters. But, ironically, these units are hardly “affordable.” Rents are not geared to income but rather are typically set at 80 per cent of market rates that many people have no hope of paying.
So, affordable housing offers neither a public nor a scaleable solution that can lift entire communities from the housing crisis. Instead, it has enabled more condo development, especially on federal and city-owned land in prime urban areas.
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Using policy to build affordable housing first emerged in 2001 through the Affordable Housing Initiative (AHI), a federal program intended to address the homelessness that was increasing across Canadian cities — fallout from cuts to social housing in the 1990s.
Having invested just over $1 billion between 2001 and 2011 to produce roughly 32,000 units nationwide, the AHI had a marginal impact on the housing crisis. It relied on a cost-sharing model that required provinces, municipalities and non-profits to shoulder long-term costs while Ottawa’s commitments remained limited and short-term.
Despite its limitations, AHI resulted in cities like Montreal, Toronto, Edmonton and Vancouver turning to inclusionary zoning. This is where developers of new condo buildings are required to rent a minimum number of residences at below-market rents, thus absorbing some of the longer-term costs of providing affordable housing.
In Ontario the Ford government has suspended inclusionary zoning in Toronto, Mississauga and Kitchener, claiming that it poses a barrier for developers. For renters, however, the policy introduces a new problemr: By relying on the same market mechanisms that produced the housing crisis in the first place — speculation and investor-driven development — rents will keep steadily rising over time even as housing supply grows.
Meanwhile, social housing providers, especially co-operatives, have had their wings clipped by federal and provincial cuts since the 1990s and continue to be marginalized in current funding frameworks.
In 2025, the federal government allocated just $1.5 billion over seven years to build 3,200 new co-operative housing units — compared to spending $1.9 billion on GST rebates for first-time homebuyers. Yet, research shows that co-operative housing produces the strongest long-term returns on public investments in social housing. Neighbours undertake collective responsibility for maintenance and repairs, resulting in substantially below-market rents over time. Housing co-operatives that provide non-market housing are also a societal benefit, as they treat housing as a common good and foster a sense of community.
Decades of investor-driven overbuilding and speculation fueled by government policy have led to the current problems in Canada’s condo housing market. But, importantly, we can and should see this downturn as an opportunity to address the affordability crisis through a different approach.
In an era of economic uncertainty, job insecurity and rising homelessness, using public policy to increase our social-housing stock can offer stability and security not just for those living under those roofs, but by extension for the entire country.
