Experts warn housing supply could shrink for years without immediate measures to spur building
Canada could face years of stalled homebuilding unless immediate action is taken to address high construction costs and low development activity, according to Statistics Canada and industry experts.
Global News reported that Mike Moffatt of the University of Ottawa’s Missing Middle Initiative said that without short-term measures to spur building, the country risks entering a period when “we’re really not building that many homes,” which could potentially lead to a sharp price surge when demand rebounds.
The federal government’s proposed Build Canada Homes (BCH) program, outlined in a consultation document released by the housing department on Monday, is positioned to prioritise affordable housing construction, Canadian-made materials, and faster conversion of federal lands into housing.
As per the document, BCH will back projects delivering a “significant number” of affordable units, including those run by co-operatives, non-profits, and Indigenous housing providers.
Prime Minister Mark Carney’s platform pledged $6bn for BCH, which would operate as a developer building at scale on public lands.
It also promised over $25bn in financing for Canadian prefabricated homebuilders, support for affordable homebuilders, and incentives for hiring apprentices and recent graduates through new requirements in federal contribution agreements for major projects.
The government is considering both financial and non-financial tools, including loans, equity investments, real property and housing investments, loan guarantees, and contributions.
It will also seek to use regional production hubs and boost public dollar efficiency through below-market-rate loans or private and philanthropic capital.
Priority will be given to projects using prefabricated or 3D-printed methods to reduce costs and environmental impacts.
Parliamentary secretary Caroline Desrochers said in an interview with The Canadian Press that BCH could launch this fall, either as a separate agency or within Housing, Infrastructure and Communities Canada.
She noted the government is “going to start doing work right now with what we have already” and is aiming to avoid “more layers of bureaucracy and approvals.”
The urgency comes as Ontario’s housing tracker, reported by CBC, shows 94,753 housing starts in 2024 — well below the 125,000 needed annually to meet Premier Doug Ford’s goal of 1.5 million homes by 2031.
Only 23 of 50 municipalities met at least 80 percent of their provincial targets last year, down from 32 the year before.
Dave Wilkes of the Building Industry and Land Development Association warned that construction industry layoffs could reach 40 percent of the workforce due to low sales and consumer confidence.
The affordability gap is also pressing in Ontario’s non-market housing sector.
A report by United Way Greater Toronto (UWGT) and the Co-operative Housing Federation of Canada (CHF Canada), Built for Good, calls for a $16.7bn two-year investment to jumpstart a province-wide affordable housing strategy.
According to the report, this funding could create 15,150 deeply affordable homes, 8,250 moderately affordable units, rental assistance for 170,000 low-income households, and preservation or repair of 65,000 existing affordable homes.
Statistics Canada data, reported by Global News, shows the total value of approved building permits fell 9 percent in June to $12bn from $13.1bn in May, marking the first quarterly decline in residential permit values in 15 months.
Residential projects saw the sharpest drop among property categories.
Moffatt attributed this to construction costs that have not fallen in line with sale prices, as well as tariff uncertainty on US-imported building materials.
Moffatt suggested that lowering the GST on home construction could serve as an immediate measure while BCH ramps up, bridging the gap before the program delivers its intended near-500,000 new homes annually over the next decade.
