Despite the budget’s assertion that “unprecedented investments in building homes for Canadians… will make housing feasible,” it is unlikely to improve affordability in the Greater Toronto Area.
The budget promises fiscal stimulus to boost economic activity and help Canadians afford housing. But spending flows unevenly through the economy. Infrastructure investments reach high-income professionals first, while working-class buyers take years to reach, even as immigration cuts weaken the markets where these buyers do business.
The result is a budget that would allow a CEO to buy a mansion in Rosedale, more than a nurse in Oshawa or a teacher in Brantford would buy their first home.
A selective stimulus
Budget 2025 introduces major investments in infrastructure, defense spending and productivity measures aimed at boosting growth. The overlooked question for housing is not where these projects will be built, but who benefits most from the spending.
Federal funding will hit private sector companies for project management, engineering, planning and professional services long before they reach the construction phase. Defense contracts follow the same pattern and go to aerospace, technology and systems companies.
Even for infrastructure projects built across Canada, a disproportionate share of seed capital reaches companies and workers in major cities like Toronto, where Canada’s business community is concentrated. Corporate structures concentrate these profits upward.
Senior management captures the largest share through performance-based compensation tied to revenue growth and stock price, while mid- and entry-level employees only see salary increases as they climb the corporate ladder.
The spending multiplier of the large budget boost will only increase from that moment on. The budget assumes a large-scale deployment of private capital in addition to government financing through partnerships and co-investments. This means that big Bay Street companies like banks, management consultancies and law firms generate huge revenues regardless of whether projects ultimately succeed or not. High-income professionals working in these sectors will ultimately generate significant income as project activity accelerates.
The build-up of infrastructure spending happens across the country, wherever the projects are located, spreading construction jobs nationally. But the white-collar revenues from the planning, financing and management of these projects are concentrated in Toronto.
This creates an uneven stimulation effect for housing. Senior professionals who bring in revenue from infrastructure see income growth that strengthens their purchasing power for high-quality single-family homes in established neighborhoods.
Working-class buyers who struggle to enter the GTA market see far less benefit from the budget spending. The budget stimulates demand selectively rather than broadly.
Housing programs miss the buyers they claim to help
Two central housing measures promise help for would-be homeowners. Neither meaningfully improves the purchasing power of first-time buyers.
Build Canadian houses
Budget 2025 allocates $13 billion over five years to Build Canada Homes, a program designed to support non-market, affordable and community housing. These offerings are essential for vulnerable populations, but the program does not touch the resale market, where the vast majority of Canadians buy and sell homes. It does not help first-time homebuyers compete for existing homes, nor does it increase the incomes of potential buyers.
GST exemption for first time buyer
The new GST rebate – which abolishes the tax on new-build homes up to $1 million and gradually phases out to $1.5 million – appears to be aimed at first-time buyers. But the challenges of the pre-construction sector run deeper. Developers relied heavily on investor absorption in the 2010s and early 2020s. As investor demand evaporates and construction financing tightens, tax relief for end users cannot compensate for the structural weakness of the development model. The reduction may yield modest savings, but will not restore the investor-driven absorption rates that once made projects viable.
Cuts to immigration remove demand where it is needed most
While infrastructure spending creates winners in upper income brackets, immigration policies remove demand from rent-heavy and investor-driven markets where working-class buyers would compete.
The federal government’s 2025-2027 immigration plan projects a decline of about a quarter in the number of temporary residents between 2025 and 2026, with numbers remaining lower than 2025 levels until 2027. More than 40 percent of permanent residents admitted in 2025 will already be living in Canada as students or workers, meaning the total numbers will exceed net new arrivals.
Ontario, which historically receives about 43 percent of new arrivals, will absorb much of this reduction. International students and temporary workers have been at the heart of rental demand over the past decade, helping to support investor purchases in the housing market. Now, student caps and changing work permit rules are cooling rental markets and feeding inventory into investors’ already stressed apartment segments.
The impact extends beyond investor apartments to suburban and secondary markets within the GTA. These markets experienced explosive price growth from 2020 to 2022 as new Canadians purchased their first homes in more affordable areas at ultra-low rates. Immigration cuts are now taking away the housing demand and consumer spending that kept these communities alive. Fewer newcomers means fewer first-time buyers competing for starter homes and reduced economic activity in local businesses, depending on population growth.
The affordability paradox
In the segments most affected by immigration restrictions, prices will weaken, theoretically improving affordability. But falling prices aren’t helping working-class buyers as their incomes stagnate. The budget’s fiscal stimulus was supposed to boost economic activity and purchasing power across the economy, but infrastructure spending reaches white-collar professionals first and could take years to trickle down to workers and first-time buyers. First-time buyers face a market where prices may fall, but their ability to qualify for mortgages and compete for homes will not improve in the short term. Meanwhile, high-income professionals who rake in infrastructure revenue immediately gain purchasing power, while inventory in the quality segments remains tight. The budget stimulates one side of the market and depresses the other.
This double pressure does not create new market dynamics. It accelerates a rebalancing that began in 2022. Ultra-low rates lifted all properties simultaneously, regardless of condition, location, or long-term utility. That dynamic came to an end when cheap credit disappeared. Value now varies based on fundamental factors: the quality of the location, the level of renovation, the condition of the building and its attractiveness to the owner. Homes with strong foundations retain their value, while properties dependent on speculative demand struggle.
A divided market
On a recent podcast, Rebekah Young of the Scotiabank Economics team summarized the problem succinctly: “A lot of Canadians will open the budget and say, what’s in it for me? And they’ll be disappointed.” That disappointment will not be evenly distributed, because not all government expenditure creates the same level of confidence
The 2025 budget does not create this difference. It accelerates what rising interest rates have already set in motion. The result is a market where benefits are increasing, widening the gap between strong and weak segments. This structural divide shapes market psychology, and in the real estate industry, sentiment drives behavior as much as fundamentals.
Ottawa also allocates budget support to sectors hit by tariffs, but defensive spending works differently than infrastructure investments. A factory kept open by tariff reductions creates hesitation about major commitments, while an engineering firm winning a multi-year infrastructure contract creates certainty. This psychological divide reinforces the market divide. Those closest to infrastructure spending are confident and will trade in quality segments, while those further away will feel left behind and will delay decisions or exit the markets entirely.
Budget 2025 promises transformation. What it creates is a sharper boundary between buyers who can act now and those who have to wait.
Cameron Levitt is a sales representative at RE/MAX Hallmark and founder of CLRE. His written work focuses on the GTA housing markets, focusing on structural market dynamics, policy-driven shifts and market behavior in neighborhood segments. He writes to clarify complex circumstances and support stronger decision-making in the real estate industry.
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