New home construction in Ontario has taken a total nosedive

Experts may be projecting somewhat of a comeback for Toronto’s real estate market this year, but those are pretty lofty hopes given the fact that many listings still aren’t moving, those that are going for cheaper than sellers hoped, and new home construction has slowed.

Ballooning building costs, taxes and obscenely escalated development charges have been leading developers to stall or abandon new complexes in the absence of the flurry of pre-sales they’re used to, and the numbers from 2024 show just how much these factors (and others) have impacted supply.

New figures from the Canada Mortgage and Housing Corporation (CMHC) show how hampered new construction in Ontario has become, with new housing starts drastically down in the province in 2024, though they were on the rise across the rest of the country.

The CMHC reported earlier this month that two per cent more new residential projects broke ground in larger centres across Canada in 2024 than in 2023, with highs of 67 per cent more home starts in Newfoundland and Labrador, 32 per cent more in Alberta and 25 per cent more in the Prairies.

On the flip side, starts fell by 16 per cent in Ontario year-over-year — the only province that marked a decline aside from B.C. (-9 per cent) and Saskatchewan (down only 5 per cent). This amounted to nearly 15,000 fewer homes being built, compared to, say, Alberta, where construction on 11,400 more homes started last year versus the year prior.

As housing pundit and Missing Middle Initiative Founding Director Mike Moffatt wrote on X alongside these stats, “Nothing pencils in Ontario: Skyrocketing taxes, high land prices and red tape.”

Moffatt has been outspoken about construction taxes and other fees associated with creating new housing supply, especially in Ontario — something that organizations like the CMHC, the Toronto Regional Real Estate Board (TRREB) and the Building Industry and Land Development Association (BILD) have likewise raised alarms about.

“To make progress towards solving the housing crisis we need to build more homes at prices that Canadians can afford, faster. To do this we need to end restrictive zoning and speed up permitting, and add greater density, especially near transit and post-secondary institutions,” the CMHC wrote just this week in a release about Ottawa’s new efforts toward this goal, including a Housing Accelerator Fund.

Premier Doug Ford has focused a lot of energy on hitting targets for new homes, allocating more funding to municipalities toward this end and implementing The Cutting Red Tape to Build More Homes Act last year.

However, consumer-facing prices for these homes have still not fallen enough for people to justify the purchase in this current economic environment, and condo sales, in particular, have been seeing meagre sales numbers for many months, which in turn prompts developers to pull back on construction.

There is also the question of whether lowering construction costs and ramping up supply will ever end up curbing housing prices to a more affordable level in a region that has perpetually been red-hot, overvalued and currently has a record number of resale homes still sitting on the market.