Federal housing funding is projected to fall from more than $10 billion to $4 billion by 2028-29
Federal housing and health funding arrangements are set to wind down in 2027-28. The coming budget could signal how Ottawa plans to replace them, according to RBC Economics.
Finance minister François-Philippe Champagne will table Budget 2026 on Nov. 5. RBC assistant chief economist Cynthia Leach said in an Oct. 26 analysis that the budget’s task is “less about new programs and more about disciplined execution.”
“Even with immediate pressures contained, two spending areas must soon be accommodated,” Leach wrote.
Housing money set to shrink
Budget 2026 could release the next version of the National Housing Strategy, which winds down in 2027-28, RBC said.
The Parliamentary Budget Officer (PBO) has highlighted that federal housing funding drops from more than $10 billion in 2026-27 to $4 billion by 2028-29, even with Build Canada Homes. Recent measures, such as development charge reforms, may have lifted that profile, but they appear temporary, RBC said.
Build Canada Homes launched with $13 billion in initial funding. The PBO projects it will produce about 26,000 units and has said it is expected to add only a modest amount to housing supply. In March, Finance Canada described its full suite of housing programs as totalling roughly $40 billion.
RBC said Ottawa has responded to affordability pressures with tariff and oil-shock support for vulnerable households. It described the economy as slowly improving, with housing “sideways” in many markets.
Health transfers also expire
Several provincial health funding arrangements end in 2027-28, RBC said. They include the 5% guaranteed Canada Health Transfer escalator and one-off agreements worth about $3 billion or more a year.
Provinces are increasingly calling for a permanently higher federal share, as rising health-care costs drove deteriorating 2026 budgets, the analysis said. After a recent one-year extension of mental health funding, health minister Marjorie Michel has designated the broader issue as one for 2027.
On both files, Leach said RBC will look for efficiencies and clear, lasting terms.
“We’ll be looking for Ottawa to push for efficiencies … and for eventual agreements ideally to delineate long-term commitments rather than funding patches that punt the issue,” she wrote.
Tight fiscal room
RBC estimates $57 billion in new five-year spending commitments since the spring update, led by the $36 billion corporate tax mega deduction. It said deficits could run more than $15 billion deeper by 2030-31 than the spring update projected.
The PBO now expects a $63.3 billion deficit in 2026-27 and a balanced operating budget by 2028-29, a year later than the government promised, the Canadian Press reported. The finance minister’s spokesperson said the PBO’s assumptions differ from the government’s.
Rates add pressure. RBC noted the 10-year Government of Canada bond yield is up 40 basis points over four months. The Bank of Canada held its policy rate at 2.25% in September and is scheduled to announce its next decision Oct. 28.
For brokers who work with builders, investors and affordable-rental clients, the funding timeline will affect how much federal support is available in coming years. RBC said it does not expect new funding for those areas in this budget, but it will watch how Ottawa frames the path ahead.
