Canada Trade Barrier Reforms to Boost Housing Supply and Economic Integration
| 2025-07-17
Canada Trade Barrier Reforms to Boost Housing Supply and Economic Integration
Canada’s removal of interprovincial trade barriers could add 30,000 homes annually and raise incomes, but experts stress the need for infrastructure upgrades.
Canada’s Housing Supply Set for Boost as Trade Barriers Fall, CMHC Reports
Canada is poised to see a significant increase in housing construction following a coordinated effort to reduce interprovincial trade barriers. According to new modelling by the Canada Mortgage and Housing Corporation (CMHC), removing these long-standing barriers could result in more than 30,000 additional housing starts per year, representing nearly 15% of the additional supply required annually to restore housing affordability to pre-pandemic levels.
Announced on 1 July—Canada Day—the federal initiative follows similar moves at the provincial level, including legislation or agreements introduced by Nova Scotia, Prince Edward Island, Quebec, Ontario, Manitoba, Alberta and British Columbia.
The CMHC says that while these policy changes mark meaningful progress, complementary investments in transportation infrastructure will be essential to fully realise the potential benefits.
Projected Gains in Housing Starts and Incomes
CMHC’s forecasts indicate that removing internal trade restrictions could push annual housing starts close to 280,000, helping to close the national supply gap that has fuelled a surge in home prices and rental costs. In parallel, the agency projects that household incomes could rise by approximately 6%, as the broader economy becomes more integrated and efficient.
These changes are expected to have immediate and long-term effects on access to homeownership. Initially, about 300,000 more households could afford to buy homes, although this figure may stabilise at around 150,000 by 2035 as rising demand and prices absorb some of the gains.
This shift is also expected to ease pressure on the rental market. “As increased incomes support higher housing demand and house prices, this will slowly diminish the number of new homeowners,” the CMHC explained. “But this also means an equivalent amount of rental units may free-up.”
Impact on Rental Affordability
The CMHC anticipates that rental prices will rise by approximately 3.1% as incomes grow. However, because incomes are expected to grow at a faster pace than rents, rental affordability could improve in relative terms.
Still, the report warns that the full benefits of these reforms depend on the supply side of the housing market keeping pace with increased demand. “Housing supply must increase to at least match the increase in demand to maintain or improve affordability,” the agency stated.
Canada’s Construction Potential and Trade Composition
CMHC’s analysis of trade data from Statistics Canada indicates that Canada is a net exporter of many key construction materials, including wood, aluminium, iron, and steel. This suggests the country has the capacity to redirect more of its domestic production toward residential construction, further supporting the housing sector.
However, the situation is less favourable for other critical inputs. For materials such as cement, concrete, and heavy construction machinery, Canada remains heavily reliant on imports, primarily from the United States and Europe.
A major factor hindering internal trade in construction goods is not availability, but geography. A Statistics Canada survey found that nearly 50% of Canadian construction firms cited transportation distance and associated costs as the main obstacles to sourcing materials from other provinces.
Call for Infrastructure Investment
Given these logistical challenges, CMHC stresses that further improvements in interprovincial transportation networks—particularly from west to east—are crucial for maximising the benefits of trade liberalisation. The agency calls for expanded investment in railways, highways, and deep-water seaports, especially in remote areas with acute housing shortages.
“These are nation-building projects,” the CMHC stated, “that will help accelerate the building of one Canadian economy from coast-to-coast-to-coast.”
The removal of interprovincial trade barriers is widely viewed as an important step toward improving Canada’s economic resilience in the face of international trade uncertainties. Economists have long argued that internal trade reform is essential for improving domestic efficiency, reducing costs, and boosting productivity.
However, experts agree that regulatory changes alone will not resolve Canada’s housing crisis. Without matching improvements in logistics and infrastructure, the ability to move goods and labour efficiently across provinces will remain limited—restraining the broader economic and social benefits of integration.
Context: Longstanding Barriers and Recent Reform Momentum
Canada’s internal trade landscape has historically been fragmented, with provinces and territories maintaining varying regulations that hindered the flow of goods and services across borders. These barriers have drawn criticism for limiting economic potential and contributing to disparities in affordability and housing availability.
The current wave of reforms—both federal and provincial—represents a rare moment of alignment between different levels of government on trade policy. The CMHC’s report positions these changes not just as regulatory progress, but as an opportunity to better align national economic policy with the country’s housing goals.
With sustained commitment and targeted infrastructure investment, policymakers hope to create a more connected domestic market—one capable of building more homes, more efficiently, in the places they are most needed.
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