In a report released on Dec. 2, the Parliamentary Budget Officer (PBO) issued a stark warning: federal spending on housing in Canada is slated to fall by more than half over the next three years. According to their analysis, spending will decline from $9.8 billion in 2025-26 to roughly $4.3 billion by 2028-29 — a drop of approximately 56 per cent.

The reduction comes even as the federal government this fall unveiled a new housing agency, Build Canada Homes (BCH), with promises of major investment. The agency has been endowed with a five-year envelope of $7.3 billion (within a total $13 billion spending framework) to support affordable housing, funding land acquisitions, financing and other initiatives.

However, the PBO’s forecast paints a sobering picture of what this translates into on the ground: over the 2025-26 to 2029-30 period, Build Canada Homes is estimated to deliver roughly 26,000 new housing units — about a 2.1 per cent increase over baseline housing completions.

That number breaks down to around 13,000 units deemed affordable for low-income households. While any addition to housing supply matters, those numbers stand in stark contrast to the broader scale of need identified by the PBO: the agency estimates that to restore housing affordability nationwide by 2035, roughly 690,000 additional units will be required. The 26,000 units from BCH would meet only about 3.7 per cent of that gap.

Critics argue that the dissonance between the government’s headline ambition and the underlying numbers amounts to a policy pivot rather than a breakthrough. With the funding for long-standing affordability tools such as the Canada Housing Benefit and other social-housing supports scheduled to wind down and with deep cuts proposed for the Canada Mortgage and Housing Corporation (CMHC), the safety net for renters and low-income households appears to be eroding even as the government touts its “new agency” narrative.

Supporters of the government argue that the new agency represents a long-term structural shift: rather than relying on subsidies and benefits, the focus is on building housing stock directly, which — over decades — could yield more stability. But the PBO points out there is currently no publicly available comprehensive plan to achieve the government’s goal of doubling housing construction. Without such a plan, what has been launched remains, in their words, a “modest contribution.”

For Canadians looking for housing — renters, first-time buyers, low-income households — the numbers suggest little immediate relief. The combination of sharply reduced funding, slowly rising supply and declining affordability supports points to a tricky road ahead. Whether future budgets will revisit these cuts remains to be seen; for now, the PBO’s report is a cautionary signal about the challenges ahead.