Canada’s homebuilding sector has continued to underperform, with sluggish housing starts and delayed projects threatening to drag down the broader economy.
Despite political promises to ramp up construction, the pace of new builds in key markets like Greater Toronto and Metro Vancouver has failed to keep up with demand, raising concerns among industry experts and economists.
“Homebuilding continues to come up short in some parts of the country, including several metro regions where most newcomers to Canada settle,” Jock Finlayson, senior fellow at the Fraser Institute, said.
“The last 12-18 months have seen many planned development projects in Ontario and British Columbia delayed or cancelled outright amid a glut of new unsold condominium units and a sharp drop in population growth stemming from shifts in federal immigration policy.”
The Canada Mortgage and Housing Corporation (CMHC) revised down its national forecast for housing starts over 2025 and 2026, despite the federal government’s pledge to double the pace of homebuilding.
Ontario’s housing starts in 2024 fell short of what’s needed to reach the 1.5 million homes goal, with first-quarter 2025 starts at their lowest since 2009, according to the province’s financial accountability officer.
“The on-the-ground reality points to stagnant or dwindling housing starts in many communities, particularly in Ontario and B.C.,” Finlayson said.
Residential real estate sales have also slowed in several regions, compounding the problem. “A fall-off in real estate transactions tends to have a lagged negative effect on construction investment—declining home sales today translate into fewer housing starts in the future,” Finlayson said.
The slowdown in homebuilding is not just a sectoral issue. Construction accounts for nearly 8% of Canada’s economy, and if government-driven industries are excluded, it employs more than one in ten private-sector workers.
“Most of these jobs involve homebuilding, home renovation, and real estate sales and development,” Finlayson said.
According to Statistics Canada, the value of GDP directly attributable to housing reached $238 billion in 2024, up slightly from 2023 but still below 2021 and 2022 levels.
Ontario and B.C. have seen notable declines in residential construction GDP since 2022—a trend expected to persist into 2026. Housing-related activity supported some 1.2 million jobs in 2024, with about three-fifths of those being direct construction roles.
A sustained downturn in homebuilding could ripple through the economy, affecting suppliers, reducing tax revenues, and slowing overall growth.
Canada’s economy took a step back in August, with GDP contracting by 0.3%. That's a sharper decline than economists had anticipated.
The pullback, driven by broad-based weakness across both goods and services sectors, has reinforced expectations among leading economists that growth will remain subdued into next year.
“Canada’s economy will struggle to rebound from the doldrums of 2025 without a meaningful turnaround in homebuilding,” Finlayson said.
Canadian Home Builders’ Association (CHBA) chief executive officer Kevin Lee previously warned that Canada’s homebuilding crisis may already be even worse than it seems with housing starts essentially skewed by construction of purpose-built rental accommodation.
The government, according to Toronto mortgage agent Kalson Jang, “needs to make it easier and less costly for developers to build homes.
CMP
No comments:
Post a Comment