Steep construction costs are a challenge in the GTA, while Ontario's municipalities often have the slowest timelines for approval.Sean Kilpatrick/The Canadian Press
Home builders across Canada pushed housing starts to their highest level since 2022 in July, with one glaring exception: Ontario, where new home construction is mired in a prolonged slump.
Ontario’s six-month average of residential construction starts was near the lowest level in a decade last month, in stark contrast to starts in the rest of the country, which powered to an all-time high, according to an analysis of Canada Mortgage and Housing Corporation construction data by Robert Hogue, assistant chief economist at Royal Bank of Canada.
British Columbia has also experienced a slowdown in starts, but not to the same extent as Canada’s most populous province.
Home construction in Ontario has lagged for a number of reasons. Municipalities in the province consistently have the highest development charges and slowest timelines for approval. Steep construction and labour costs have also been a particular challenge in the Greater Toronto Area.
At the same time, the inventory of unsold homes in Ontario – largely tiny, unwanted condo units – has risen higher and faster than in other provinces, sapping investor interest in preconstruction units and giving builders less incentive to start new projects.
All of which does not bode well for future supply.
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“While homebuilders and municipalities are keen to respond, factors like the high development and building costs in Ontario and substantial inventory are weighing on the initiation of new projects,” Mr. Hogue wrote in his report.
“The downturn in Ontario’s housing construction pipeline could have dire consequences for 2026 and beyond if not addressed.”
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