Housing Systems Under Strain: Canada and China in Comparative Perspective

Abstract

The article “Housing Systems Under Strain: Canada and China in Comparative Perspective” examines how two fundamentally different housing systems, Canada’s market-driven model and China’s state-coordinated system, are both facing mounting pressures despite their contrasting institutional frameworks. Drawing on discussions from a 2024 international workshop, the paper frames housing not simply as a market commodity but as a complex structural system shaped by governance, land policy, demographics, and social expectations.

In the Canadian context, the housing system is characterized by heavy reliance on private markets, with governments primarily intervening through regulation and incentives rather than direct provision. Historically, this model functioned effectively due to stable population growth, abundant land, and supportive infrastructure investment. However, over time, its responsiveness has weakened. Rapid urban population growth, driven largely by immigration, has collided with supply constraints caused by restrictive zoning, lengthy approval processes, labour shortages, and rising construction costs. This imbalance has led to persistent housing undersupply and sharply increasing prices across the country.

Affordability has become a national crisis, extending beyond major metropolitan areas to smaller cities. Rising land values, higher interest rates, and escalating development charges have further intensified costs. Importantly, the article argues that Canada lacks a true “affordable housing product,” as affordability typically depends on subsidies or regulatory intervention rather than market provision alone. This structural issue is especially evident in the rental sector, where demand has surged as homeownership becomes less accessible. Yet new rental construction remains financially challenging, resulting in a mismatch between what is needed and what the market can deliver.

The paper also highlights the unintended consequences of intensification policies. While increasing density is essential for sustainability, it often leads to the displacement of lower-income residents through processes such as renovictions and redevelopment of older affordable housing stock. At the same time, Canada faces a paradoxical situation in which housing shortages coexist with oversupply in certain segments, particularly urban condominiums. These units are often misaligned with demand, catering to investors or higher-income households rather than addressing the need for affordable and family-oriented housing.

Declining homeownership rates further illustrate growing inequality. Housing has become a key driver of wealth accumulation, but access increasingly depends on intergenerational support. Those without such resources face long-term rental dependency and limited opportunities for asset building. Meanwhile, homelessness has reached crisis levels, driven largely by the shortage of affordable housing. Although Canada has adopted a Housing First approach, implementation challenges and funding constraints mean that emergency responses still dominate over long-term solutions. Recent federal initiatives signal renewed involvement, but structural issues persist.

In contrast, China’s housing system has undergone a dramatic transformation over the past several decades. Prior to market reforms, housing was treated as a welfare good allocated through state institutions, ensuring widespread access but resulting in overcrowded and underinvested living conditions. Beginning in the late 20th century, China transitioned toward a market-oriented system, privatizing housing and promoting homeownership. This shift led to rapid improvements in living standards and a dramatic increase in housing supply, supported by state control over land and strong local government involvement.

China’s system has been particularly effective at anticipating and accommodating urban growth. Large-scale construction, supported by land leasing and centralized planning, allowed housing supply to expand ahead of demand, preventing the widespread shortages seen in many other rapidly urbanizing countries. However, this model has also introduced new risks. The close interdependence between developers, local governments, and financial institutions has created vulnerabilities, particularly as developers accumulated high levels of debt.

Recent policy changes, including restrictions on developer borrowing, have exposed these weaknesses. Combined with slowing population growth and economic uncertainty, these shifts have led to oversupply in many cities, stalled construction projects, and declining market confidence. Unlike Canada’s undersupply, China now faces the challenge of excess inventory and financial instability within its housing sector.

In response, the Chinese government has adopted a more interventionist approach, implementing policies to stabilize the market, complete unfinished projects, and convert unsold housing into affordable units. There is also a growing emphasis on expanding rental housing and reducing reliance on homeownership. Land policy remains a central tool, enabling governments to allocate resources strategically and support housing development at scale.

Demographic change adds another layer of complexity. China’s ageing population and large “floating population” of internal migrants create new housing demands and challenges related to access to services. Reforms to the hukou system and targeted policies aim to improve integration, but structural barriers remain.

The comparative analysis reveals that, despite their differences, both countries face similar core challenges: affordability pressures, mismatches between supply and demand, and the broader social consequences of housing insecurity. However, their institutional structures shape both the nature of these challenges and the available policy responses. China’s centralized system allows for rapid, large-scale intervention, while Canada’s fragmented governance and market reliance limit responsiveness.

The article concludes that no single model offers a complete solution. Instead, housing must be understood as an interconnected system requiring long-term, coordinated policy approaches. Canada could benefit from stronger national coordination and more proactive land and supply strategies, while China may draw lessons from Canada’s experience with tenant protections and community-based housing solutions. Ultimately, continued dialogue and comparative analysis are essential for developing more effective and equitable housing policies in both contexts.