Overall homebuilding has surged across Canada, with Ontario the exception
Canada has recorded one of its strongest periods of homebuilding in history, with more than one million units started in the last four years. According to a new Royal Bank of Canada (RBC) report, construction activity remains solid across much of the country in 2025, with Alberta, Atlantic Canada, Saskatchewan, and Quebec posting significant gains.
Yet Ontario stands out as an exception. Housing starts in the province, particularly in the Greater Toronto Area (GTA), have dropped to their lowest level in a decade. RBC warns this trend threatens to worsen affordability challenges already weighing on households.
Ontario’s slowdown
The report shows that Canada’s overall housing starts averaged more than 250,000 annualized units in the first half of 2025, well above the pre-pandemic average of 201,000. However, Ontario’s six-month average has sharply declined.
“Ontario’s six-month average has fallen to the lowest level in a decade—trending in the opposite direction of what’s needed to achieve the provincial government’s ambitious goal of building 1.5 million new homes over 10 years,” RBC economists wrote.
British Columbia has also seen a slowdown, though to a much lesser extent.
Barriers to construction
The analysis points to several factors behind Ontario’s lagging starts. Builders face rapidly rising expenses for land, labour, and materials, compounded by high municipal development charges. The price index for residential construction in Ontario has outpaced all other provinces since 2018.
At the same time, the province has seen a growing inventory of existing homes, many selling for less than new builds. This has weakened demand for new projects, particularly condominiums. Investor appetite for pre-construction condos—a key driver in the GTA—has nearly collapsed amid higher interest rates, softening rental markets, and falling condo prices.
Although municipalities such as Toronto are issuing more building permits, many projects are not moving forward due to cost pressures.
Risks for future supply
The report cautions that while more than 93,000 units remain under construction in the GTA—just 11% below record levels—the current slowdown will affect housing stock in the years ahead. Large multi-unit projects can take two to three years to complete, meaning today’s weak starts could result in fewer completions by 2026 and beyond.
“Any material drop in completions causing a slowdown in the housing stock’s expansion would make it that much harder to close the province’s housing supply gap,” RBC stated.
The findings highlight a growing divide in Canada’s housing market: while some provinces are building at record pace, Ontario’s struggle threatens to deepen its affordability crisis.
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