Ontario’s homebuilding sector is warning of widespread layoffs and stalled housing delivery if the cost to build doesn’t fall.
The Building Industry and Land Development Association (BILD) released a report Monday highlighting how a persistent drop in new home sales is putting tens of thousands of construction jobs at risk, and renewing its call for tax relief to help stabilize the market.
“We are seeing sales have stopped,” said Dave Wilkes, president and CEO of BILD. “Without sales, you don’t have that ability to undertake new projects, to make those investments, to provide those well-paying jobs the sector is known for.”
Housing starts and jobs at risk
According to a research brief prepared for BILD by Altus Group, new home construction in Ontario could bottom out at just 4,000 single-family homes and 10,000 apartments per year if market conditions don’t improve.
If home sales remain stalled, the group estimates 40,000 direct construction jobs and an additional 30,000 supply chain jobs could disappear.
While the lobbying group noted this is not a formal forecast, the report emphasized that this is a reversal from just a year ago, when a labour shortage was seen as a major challenge in the push to increase housing supply.
“That’s how quickly the market has turned, unfortunately,” Wilkes said. “As interest rates went up, and we saw some instability in the geopolitical environment, it created real challenges.”
‘Cost-to-build crisis’
Although material and borrowing costs have begun to decline alongside interest rates, developers say new home prices are still out of reach for many buyers. BILD argues that government-imposed taxes and fees are keeping total costs too high and deterring investment.
“What we have now is a cost-to-build crisis,” Wilkes said. “The price points are too high for individuals to be able to afford, despite the other adjustments.”
To address this, BILD is urging both federal and provincial governments to fully waive the harmonized sales tax (HST) on new housing developments, rather than offering relief for only select housing types. The group estimates the measure would cost the federal government $2 billion and the Ontario government $900 million.
“There’s projects being completed now, but once those projects get completed in '26 and '27, there is gonna be a real lack of jobs, lack of investment, lack of a new activity, and lack of delivery of new homes in '28 and '29,” Wilkes added.
Despite some recent provincial legislation reducing fees and streamlining approvals, government-controlled fees still make up less than a third of the total cost of a new home.
Briefing materials for Ontario Housing Minister Rob Flack show that developer profit margins typically need to be above 10% for a project to be viable, with 10–20% of the cost attributed to profit, 10–30% to soft costs like taxes, 10–20% to land, and 50–70% to hard costs such as materials and labour.
Wilkes said developers are already accepting lower profits due to the market slowdown.
“The market is forcing those adjustments in profit—we always argue it is a 10 to 12 per cent range,” he said. “Now, government—through development charges (provincial sales tax), (goods and services tax)—is making more on a house, many more fold, than the developer.”
The Ontario Ministry of Municipal Affairs and Housing indicated it may be open to further tax relief.
“We have been clear—we need partnership from the federal government to continue reducing HST and GST on homes,” a spokesperson said in a statement.
CMP
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