Plunging condo construction in those two cities is clouding the overall national outlook
Overall Canadian housing starts failed to pick up pace in the first half of 2025 with contrasts emerging between key cities, according to the latest Housing Supply Report from Canada Mortgage and Housing Corporation (CMHC).
Calgary, Edmonton, Montreal, Ottawa, and Halifax saw housing starts at or near record levels, while Canada’s most expensive markets, such as Toronto and Vancouver, dragged national growth to a standstill.
Rental surge fails to offset condo slump
A surge in purpose-built rental starts, underpinned by government incentives, was not enough to counter a steep drop in condominium construction, especially in Toronto, Vancouver, and Montreal.
“While the increase in rental construction in the first half of 2025 was encouraging, the ongoing construction slowdown in the homeownership market poses risks to future housing supply, workforce retention, and affordability,” said Tania Bourassa-Ochoa, deputy chief economist for CMHC.
“Systemic changes to Canada’s housing system are necessary to create an environment with more cost and time certainty to increase supply."
In Toronto, homebuilding activity per capita fell to its lowest point since 1996, driven by a 60% drop in condo starts.
“A pullback in investor demand during the first half of 2025 reduced project feasibility, leading to cancellations, delays, and a sharp drop in construction,” the report stated. Rental apartment starts performed better but still declined 8% from 2024.
“I think the challenge here is to have incentives for the private sector to get more involved in rental apartment construction but that those incentives are not [hindering] demand, because that’s the equation that is so difficult to balance right now,” CMHC deputy chief economist Kevin Hughes previously told Canadian Mortgage Professional.
Vancouver’s condo starts fell 13.4%, with weak pre-construction sales leading to project cancellations. “Development charges are a major barrier to homebuilding in Vancouver,” the CMHC report noted. New provincial rules effective January 2026 will allow builders to defer up to 75% of these charges until occupancy. It aims to unlock an estimated 100,000 approved but stalled homes.
Prairie and Atlantic cities buck the trend
Calgary set a record pace for new home construction, buoyed by strong population growth, updated zoning, and municipal incentives. “Calgary recently approved ten office-to-residential conversion projects…with the potential to add an additional 1,100 homes to the downtown,” the report said. Edmonton also saw robust growth, though a slowing pace of apartment completions may signal a shortage of skilled labour.
Halifax and Ottawa both reported high rental construction, with Halifax developers warning that “obtaining the initial approval permits for projects took longer than building the actual housing.” Ottawa’s rental surge was tempered by sluggish condo sales and a slowdown in population growth.
