Canada and Italy:
the next generation’s squeeze

Growth that does not feel like progress

Canada’s recent decline in real GDP per person is unusually stark. Italy’s story is different: a long period of weak productivity and low growth. In both places, younger adults can reasonably feel that the old bargain—education, work, then a home—has weakened.

Why home ownership feels further away

Housing prices are set by many forces: local supply restrictions, interest rates, construction costs, incomes, investor demand, household formation and location. Governments do not simply set prices. Yet policy choices can reduce the risk of a sharp fall in existing home values while doing too little, too slowly, to expand supply and improve entry for new buyers.

In Canada, this is especially sensitive because a principal residence can generally be sold without tax on the capital gain when it qualifies for the principal-residence exemption. That rule is valuable to many ordinary owners, including retirees, but it also means housing wealth is treated more favourably than many other gains.

• Existing owners tend to benefit when values remain high and mortgage credit remains available.
• New buyers must finance a larger purchase from employment income and savings, often while paying high rents.
• CMHC says the structural response must be supply: Canadian housing starts would need to nearly double to roughly 430,000–480,000 annually through 2035 to meet projected demand.

It is more accurate to say that Canada’s policy mix has often protected the value of existing housing assets than to say any government is deliberately “keeping Boomers rich.” Many older Canadians are asset-rich but cash-poor; a responsible solution must improve affordability without treating them as the enemy.

Germany and the United States are escape valves

Young Italians can move freely within the European Union, making Germany an accessible option for work and career advancement. In 2024, Italy recorded 156,000 citizens emigrating abroad; Germany was the leading destination at 12.8%, followed by Spain and the United Kingdom.

Canadians face a different path. The United States is the largest destination for Canadians living abroad, helped by geography, an integrated labour market and substantially higher pay in some professions. This should not be exaggerated: Statistics Canada reported a 2021 rate of 4.8 moves to the United States per 10,000 Canadian-born people. It is a real option for some, not evidence that most young Canadians are leaving.

Protect people, not only asset prices

There is no single cure. A more balanced response would measure success by whether younger adults can form households, build savings and remain in the country—not merely by whether house prices avoid falling.

• Build more homes in high-demand areas, including rentals, co-ops, gentle density and purpose-built family housing.
• Raise productivity through investment, competition, skills and faster approval systems—so wages can grow without relying on housing inflation.
• Make first-home saving and ownership pathways practical, while avoiding measures that simply add purchasing power to a limited supply of homes.
• Be honest about trade-offs: rapid supply reform can moderate price growth, but affordability cannot improve if every policy is designed around ever-rising values.

The point is not to blame Baby Boomers, immigrants, renters, or young people. It is to rebuild a fairer ladder: productive work should once again provide a believable route to an independent home and a stable future.

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