In the first half of 2025, construction began on only 27,368 new homes in Ontario – a 25-per-cent drop compared with the same period in 2024.EDUARDO LIMA/The Globe and Mail
Jake Fuss and Austin Thompson are analysts at the Fraser Institute.
According to new data from Canada Mortgage and Housing Corp., home building in Ontario plummeted in the first half of 2025 compared with prior years, making Premier Doug Ford’s target of 1.5 million new homes by 2031 look increasingly far-fetched.
While building more homes remains a challenge across much of Canada, the particularly sharp decline in Ontario undermines national progress. In the first half of 2025, housing starts in Ontario fell by 25 per cent compared with last year. Meanwhile, the rest of Canada saw a 17-per-cent increase in starts during the same period.
The weak numbers undermine the Carney government’s pledge to double national home building by 2035 – a goal that was already very unrealistic. But the failure to increase home-building levels in Ontario does more than tarnish the reputation of politicians who make promises they can’t keep – it frustrates progress toward housing affordability across the country, harming Canadians who are priced out of the housing market or struggling to pay rent.
In the first six months of 2025, construction began on only 27,368 new homes in Ontario – a staggering 25-per-cent drop compared with the same six-month period in 2024, and 35 per cent below the first half of 2023. In fact, Ontario saw more housing starts in the first half of 2020 (33,588) despite disruptions caused by the COVID-19 pandemic.
More broadly, from 2022 to 2024, Ontario averaged only 86,650 housing starts each year – far short of the 150,000 starts a year required to meet the Ford government’s target of 1.5 million new homes by 2031.
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Across Ontario’s municipalities, home-building trends vary significantly. Some cities have achieved notable growth. For instance, Ottawa recorded 5,150 housing starts in the first half of 2025, an 82-per-cent increase compared with the same period last year. Others have seen construction nearly grind to a halt. In Guelph, just 46 new homes were started in the first half of the year – a 76-per-cent drop from the same period in 2024. And Toronto recorded a paltry 12,575 housing starts in the first half of this year – a 44-per-cent decline from the same period in 2024. Given its size, Toronto’s poor performance is especially consequential.
In absolute terms, 9,003 fewer homes were built in Ontario relative to last year while 12,921 more homes were added in the rest of the country. That’s a problem for all Canadians looking to buy a house, because as the country’s most populous province, Ontario’s home-building slowdown has nearly cancelled out the gains made elsewhere.
In other words, the trends in one housing market can have spillover effects in other markets. When the country’s largest province stumbles, it drags national progress down with it. The consequences ripple outward – people priced out of Ontario drive up housing costs elsewhere. Sky-high prices in economic hubs such as Toronto push workers away from where jobs are most plentiful. And inflated housing costs feed household debt, leaving Canadians more exposed in the next economic downturn.
This is all happening despite billions of taxpayer dollars being spent on initiatives meant to boost home building. In this year’s provincial budget, the Ford government earmarked an additional $400-million for the Housing-Enabling Water Systems Fund (which helps expand water systems for new housing development) and the Municipal Housing Infrastructure Program (on top of the $2-billion the government plans to spend on these two programs until 2027). The Ontario government will also spend $325-million (over seven years) on a joint project with the federal government and the City of Toronto for the waterfront revitalization plan, which includes new housing development. This spending is helping drive major increases in the province’s debt, while barely moving the needle on housing supply.
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Of course, housing costs depend on supply and demand. The demand side, fuelled mainly by federal immigration policy, remains out of the Ontario government’s control. But Ontario and its municipalities can help improve housing supply; unfortunately, they have instead allowed significant barriers to persist. For example, the Ford government has decided not to allow four-unit homes on residential lots, ignoring a key recommendation of its own Housing Affordability Task Force. And housing developers in Toronto and Hamilton face the longest wait times in the country to receive municipal approvals to start building – these two cities also charge some of the highest upfront fees on new housing development in the country, discouraging new construction.
If policy makers in Ontario are serious about tackling the housing crisis, they should remove these self-imposed barriers to home building. While Ontario’s housing failures are felt most acutely by its residents (through high prices and limited options), the fallout reaches far beyond provincial borders. No serious effort to address housing affordability in Canada can succeed without Ontario getting its house in order.