Ontario Home Builders Expect Fewer Housing Starts and Deeper Supply Shortage in 2025

According to the Residential Construction Council of Ontario (RECON), housing starts over the next few years will likely weaken and the already-dire supply shortage could get even worse, Ontario Construction News reported (11-18-24).

A new report released last week shows employment in new residential construction sector “will probably fall quite a lot” in the years ahead. The report, titled Housing Market Outlooks in Ontario, was prepared for RESCON by a Toronto-based economic research firm led by Will Dunning who has been analyzing housing markets for more than 40 years for clients in the private, public, and not-for-profit sectors. It provides an overview of the housing market and develops forecasts covering 2024 to 2028 for Ontario, as well as municipalities in the Census Metropolitan Areas of Toronto, Hamilton, and Oshawa.

For new home sales to recover, affordability needs to be returned to prior levels via a combination of interest rate decreases and reduction in government-imposed costs and land prices. The report cites other factors that need to be addressed, such as delays in land use approvals and infrastructure, the amount of developable land available for purchase by builders, and escalation of mortgage regulations which have reduced mortgage amounts that can be obtained by buyers.

In a statement accompanying the report, RESCON president Richard Lyall said:

“The bottom line is that all governments need to get their act together and work in unison to tackle the problems that are affecting construction of new homes. Governments have made some inroads and the recent plan floated by the federal Conservatives to remove the sales taxes on new housing sold for under $1 million is a good start. We hope the province (Ontario) follows suit, and we need to reduce the bureaucracy associated with getting new homes built. If we don’t take these steps the consequences could be catastrophic for our industry and the economy.”