Ontario, rather than Canada as a whole, is experiencing a housing market slowdown, according to RBC's analysis.
The Canada Mortgage and Housing Corporation (CMHC) recently released the latest housing start numbers, revealing that while the pace of housing construction in Canada is increasing, Ontario is experiencing a significant slowdown. According to RBC economist Robert Hogue's report, this slow pace is at the root of the housing crisis in Canada.
Housing starts have been the strongest in the last four years in Canada and remain robust in much of the country this year. However, Ontario has seen a steep decline, with the slowing pace of condo construction in the Greater Toronto Area (GTA) plummeting with no end in sight. Experts attribute this decline to high development and construction costs, as well as municipal development charges and other fees.
Builders in Ontario have experienced a rapid escalation of expenses for land, labor, and materials. This has led to a prolonged construction period, with it taking two, three, or more years to complete a large multi-unit project once the foundation has been poured. The full impact of this current slowdown in housing starts in Ontario won't be felt for years.
The GTA market is still absorbing the wave of condo units completed in 2024, which started during the pandemic or earlier. Toronto has recorded the strongest decline in housing construction spending in recent months, significantly contributing to Canada's housing crisis.
In contrast, while British Columbia (B.C.) has seen some moderation in housing starts, it is not as stark as it is in Ontario. Alberta, Saskatchewan, Manitoba, Quebec, and Atlantic Canada have all seen higher housing starts. Nationally, Canada saw construction start on 263,000 units in July, a jump of 3.7% compared to the previous month.
The downturn in Ontario's housing construction pipeline could have dire consequences for 2026 and beyond if not addressed. The six-month average of housing starts in Ontario has reached a decade-low, raising concerns about the availability of affordable housing in the province.
As the housing crisis continues to unfold, policymakers and industry leaders will need to address the root causes of the slow pace of housing starts in Ontario to ensure the long-term sustainability of Canada's housing market.
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