A group of workers can be seen on site building a new condo complex. National Post
Canada’s housing shortage could get worse before it gets better. New forecasts show that the number of new homes being built is set to drop this year and again next year. The Canada Mortgage and Housing Corporation (CMHC) predicts around 237,800 housing starts this year, down from more than 245,000 in 2024.
The decline is expected to continue, falling to about 227,734 next year and 220,016 in 2027. That’s far below the 267,000 average from 2021–22, and less than half of the 480,000 homes CMHC says Canada needs to build each year to meet demand.
Ontario and B.C. Hit Hardest
The slowdown is most noticeable in Ontario and British Columbia. In B.C., housing starts are down 8%. In Ontario, they’ve fallen 25%. This is happening despite soaring housing costs in cities like Toronto and Vancouver.
“Affordability remains a major issue and new construction is slowing,” CMHC said in its latest market report.
Why Building Is Slowing
Analysts point to many factors: high interest rates, rising unemployment, expensive building materials, and costly labour. In some cities, there’s little available land in good locations. Trade tensions, slow population growth, and fewer pre-sales are also affecting construction.
It can take more than a decade for new housing projects to go from planning to move-in, especially when roads, water, and electricity must be added.
Impact on Economy and Government
Economists stress that more new builds would help lower prices, boost jobs, and create tax revenue. When construction slows, governments lose money. In the Greater Toronto Area alone, the three levels of government could lose more than $6 billion in tax revenue.
Municipalities depend heavily on development charges and taxes from new housing. Some have started lowering fees to encourage building, but many hesitate because they need the revenue.
Political Promises vs. Reality
During the last federal election, all major parties pledged big housing plans. The Liberals promised 500,000 new homes each year for 10 years, a new Crown corporation called Build Canada Homes, and tax breaks for first-time buyers.
The Conservatives promised to link federal infrastructure funds to housing targets, remove the GST on some new homes, and penalize cities that fail to build enough. The New Democrats vowed to build 3 million homes before the decade ends.
Uncertain Future
Experts say governments aren’t acting fast enough. Some developers are holding onto approved land until market conditions improve. Investors are pulling back from pre-construction projects, and red tape is slowing everything down.
Without major changes, the housing shortage could deepen — making homes even more expensive and harder to find.
