Are plans to meet long-term housing targets in shreds?
A sharp slowdown in new residential construction in Ontario during the first quarter of 2025 has raised questions about the province’s ability to meet long-term housing targets, according to a report by the Financial Accountability Office (FAO).
The report found that only 12,700 housing units began construction between January and March—down 20% compared to the same period last year. This is the weakest first-quarter performance since 2009.
While employment, trade, and exports all posted gains in early 2025, the housing sector continued to lose ground. Financial accountability officer Jeffrey Novak wrote that elevated construction costs and weak demand have discouraged developers, while affordability challenges remain a concern for prospective buyers.
The provincial government has committed to building 1.5 million new homes by 2031, but recent figures suggest current activity levels are not aligned with that timeline.
Home resales also trended lower. The FAO recorded 36,300 transactions during the first quarter, the lowest non-recessionary level since the early 2000s. Novak linked the decline in resales to economic uncertainty and concerns about potential US tariffs, which have influenced consumer sentiment around employment and finances.
Ontario’s spring budget revised total housing start projections for 2025 to 71,800—down from the 92,300 estimate presented in the previous budget cycle.
In response to the report, a spokesperson for provincial housing minister Rob Flack said the government expects several billion dollars in infrastructure funding to support development. Alexandra Sanita, in a statement, noted that external pressures such as global volatility, supply chain disruptions, and US tariff threats continue to affect Ontario’s construction environment.
Sanita added that the province is adjusting regulatory processes and development timelines to encourage more residential construction and reduce delays.
Opposition parties pointed to the decline as evidence that current policies are not delivering results. NDP finance critic Jessica Bell said the government should prioritize nonprofit housing on public land and introduce tighter rent controls. She also urged changes to zoning regulations to facilitate faster project approvals.
Green Party leader Mike Schreiner criticized the allocation of public funds to highway infrastructure projects, saying those resources should be redirected to support the construction of affordable housing.
While overall economic indicators suggest activity is stable in other sectors, housing performance continues to fall below expectations, creating uncertainty for industry stakeholders and policymakers tracking long-term supply commitments.
