Canadian housing target falling short as construction slows

Canada will fall far short of its ambitious housing affordability goals, new data from the Canada Mortgage and Housing Corporation (CMHC) confirmed.

Blacklock's Reporter says the federal insurer predicts a slowdown in construction for 2025, making it even more unlikely the government will meet its target of 3.9 million new homes by 2031.

“We expect housing starts to slow down over the forecast period,” CMHC wrote in its 2025 Housing Market Outlook. Urban housing starts reached 227,697 last year, but at least 650,000 per year are needed to stay on track.

“The slowdown is primarily due to fewer condominium apartments being built,” CMHC noted.

“With low investor interest and more young families looking for family-friendly homes, developers will find it harder to sell enough units to fund new projects. The increase in unsold units will likely reduce new project launches.”

The affordability crisis remains most severe in Ontario and British Columbia.

“Housing markets in Ontario and British Columbia are particularly unaffordable,” said the report.

“We expect sales in these markets to remain below their 10-year averages. This is due to ongoing affordability challenges and the more notable impact of new immigration targets.”

CMHC expects home prices in these provinces to grow at a slower pace, especially in the early part of the forecast period. More affordable markets in Alberta and Québec, meanwhile, are seeing a rebound.

“Sales in these provinces are expected to reach historically high levels with prices growing faster than national averages,” CMHC wrote.

Housing Minister Nathaniel Erskine-Smith, the fourth minister to hold the role in three years, did not comment on the figures.

“I understand there’s a short runway,” Erskine-Smith told reporters following his appointment on December 20.

Builders have long warned that the government’s construction target is unrealistic. Canada’s record for annual housing starts was set in 1976 at 273,200.

“We are staring into a pit,” Richard Lyall, president of the Residential Construction Council of Ontario, testified last May 27 at the Commons human resources committee.

“What we are saying is that when cranes are coming down they are not going back up.”

“Claims were made in Budget 2024 that they would build 3.87 million homes by 2031; how realistic is this?” asked Conservative MP Tracey Gray (Kelowna-Lake Country, B.C.).

“Not a chance,” replied Lyall.

Municipal development charges are a major hurdle, Lyall said. “How much are the taxes, fees and levies on new housing now?” he asked. “It varies across Canada of course but in the Greater Toronto Area it is 31% of the cost of new housing. In British Columbia they did their own study, it was 30%.”

“That is by far the highest in North America and it’s not sustainable,” Lyall said. “It particularly hits the first-time buyer the most. We effectively tax housing like alcohol and tobacco. It’s like a sin tax. It doesn’t make sense.”