A new report has shed light on a worsening outlook for homebuilding
It’s no secret that Canada is in the midst of a sharp housing crisis, with high prices and mortgage rates continuing to lock scores of buyers out of the market.
But this week, the parliamentary budget officer (PBO) issued a stark warning about the extent of that fiasco: Canada needs to build a staggering 3.2 million new homes in the next decade to restore affordability, but remains well off the required pace.
An average of 227,000 new homes will be built every year between now and 2035, according to the PBO – and that’s still short the additional 65,000 annual completions required.
Addressing the housing crisis was a centrepiece of prime minister Mark Carney’s election campaign earlier this year. His Liberal Party’s platformv included a pledge to turbocharge the pace of homebuilding to 500,000 homes a year, driven by a new entity called Build Canada Homes (BCH) to increase affordable housing production and incentivize development.
But there are plenty of issues that need to be addressed if home construction is to emerge from its current slump, according to Canadian Home Builders’ Association (CHBA) chief executive officer Kevin Lee (pictured top) – not least development charges, which he described as a “huge barrier” to builders.
“We know municipalities need funding to support the things that they’ve been trying to cover with the development charges,” Lee told Canadian Mortgage Professional. “So there’s no question that we need alternative funding and financing models that the municipalities can make use of. Some of that can come from the federal government and the provincial government.
“But there are also other ways for municipalities to spread those things across the tax base in a better way. There are property taxes, which nobody likes to see go up, but they’re a more appropriate way to fund a lot of these infrastructure needs of entire communities and cities.”
Public-private partnerships and long-term municipal debt could also be financed in a better way, Lee suggested – and he also highlighted a “real disconnect” at the federal level with the National Building Code.
Building code complications causing headaches
At the beginning of this year, changes were made to harmonize Ontario’s code with the federal code, introducing changes like new technical requirements for timber construction and improved fire and accessibility standards. Alberta, too, agreed some moves to move closer in line with the national rules.
But Lee said efforts to make changes at the national level to the building code could have unintended consequences for builders. “They’re going to make things so much more expensive in terms of construction for not enough return at this stage, when we have such an affordability crisis,” he said.
“For a long time, we’ve been saying we need affordability as a core objective of the building code and we need to stop putting anything in the building code that’s going to make construction more expensive.”
Toronto outlook weighed down by condo crisis
In the Greater Toronto Area (GTA), a flood of new condo units is set to hit the market in the months ahead, even with supply swelling in that space because of the rapidly escalating condo crisis facing owners and investors.
Joel Fox of Ownright explains why high prices, steep carrying costs, and small unit sizes are keeping younger buyers on the sidelines.
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 26, 2025
Read more on the challenges facing buyers.https://t.co/yZxspMf3EJ
Some developers are pulling out of projects and others are shelving plans – but Lee said the condo glut shouldn’t paper over the cracks of the city’s wider housing crisis.
“It appears to be an era of change there, although there’s obviously still a big need for more housing in the area,” he said. “From development charges on down, there are changes needed to reinvigorate that market because it’s still such a draw for immigration and lots of businesses.
“Making all those changes so that we can get construction back on track is going to be important. And the thing that we need to recognize is with this state that we’re in right now and in the GTA – particularly with multifamily – it’s going to take years to get that back on track.”
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