Despite the urgent need to accelerate homebuilding, a new report prepared for RESCON reveals a sharp decline in housing starts and mounting job losses across the industry.
The data are stark. Condo apartment starts in 2025 have fallen 52% compared with the 2021–24 average. Ground-oriented housing starts are down 43%. In the Greater Toronto and Hamilton Area there were no new condo launches in the first quarter of this year — an unprecedented collapse — while sales in the region have plunged 94% below the 10-year average.
This is not a short-term cyclical dip. It reflects a deeper structural failure.
At its core, the problem is straightforward: builders are unable to deliver homes at prices that buyers can afford. Until that changes, supply will not recover regardless of how strong demand remains.
The encouraging part is that much of this crisis is policy-driven, which means it can be addressed through policy change. If governments are serious about restoring housing affordability, five reforms stand out as essential.
Development charges are crushing affordability
Government taxes, fees and levies now account for more than a third of the cost of a new home in Ontario. In some cases, municipal charges alone add well over $100,000 to the price of a single unit. These charges have risen far faster than inflation, putting upward pressure on home prices.
The existing model forces new homebuyers to bear the upfront cost of long-lived infrastructure — roads, sewers and transit — that will serve communities for decades. That approach is neither fair nor efficient. Infrastructure should be financed over its useful life and aligned with its lifespan, rather than loaded onto the first purchaser.
What is needed is structural reform that shifts infrastructure funding toward long-term financing tools and away from one-time levies. Without this change, any short-term affordability gains are likely to evaporate once temporary programs expire.
Approval timelines are killing projects
Time is money in development, and Ontario’s approval system is unusually slow. In the Greater Toronto Area, approvals routinely take 18 to 24 months — nearly double the national average. Each month of delay adds thousands of dollars in carrying costs per unit and undermines project viability.
Uncertainty from protracted approvals discourages investment and often kills projects before they begin. Builders cannot assume multi-year approval risks when financing and market conditions demand precise timelines.
The solution is straightforward: implement clear, enforceable provincial timelines, ideally under 12 months, with meaningful consequences for non-compliance. The market requires predictability as much as speed. Without it, capital will remain on the sidelines and projects will continue to stall.
HST relief must become permanent
Taxes on new housing not only affect builders but also limit buyers’ ability to enter the market. The harmonized sales tax (HST), applied on top of already inflated prices that include embedded development charges, compounds the affordability challenge.
Recent measures to rebate portions of the HST for new homes under $1 million are a positive step, but as temporary, one-year measures they are insufficient to change long-term market behaviour. Making HST relief permanent would deliver immediate, tangible affordability benefits for buyers and support a more stable market outlook.
Industrialized construction must scale up
Construction productivity in Ontario has declined for decades. Since 2001, output per worker has dropped by more than a third — a dramatic setback in an industry that should be capturing productivity gains from innovation and technology.
The traditional site-built model struggles with labour shortages, rising costs and increasingly complex projects. Industrialized construction — including modular, prefabricated and off-site manufacturing approaches — offers a clear path to greater efficiency. These methods can shorten construction timelines by 30–50%, reduce labour requirements, improve quality and cut waste.
Adoption remains limited in part because the industry lacks scale and incentives to transition. Targeted public investment, supportive procurement strategies and partnerships can accelerate adoption. If governments are serious about boosting housing supply, they must help modernize how homes are built.
Building code reform can unlock missing-middle housing
A substantial portion of urban land in Ontario cannot be efficiently developed under current building code requirements, particularly rules that mandate double-staircase designs in mid-rise buildings. Those requirements add cost and complexity that prevent feasible development on many lots.
Allowing single-stair configurations — an approach used in many European jurisdictions and recently accepted in British Columbia — for buildings up to six storeys would enable more flexible, cost-effective designs. That change could unlock underused urban lots and facilitate gentle density that fits within existing neighbourhood contexts.
Each reform carries trade-offs: reduced municipal revenue, adjustments to local planning discretion and disruptions within the construction industry. But the alternative is a housing system that continues to undersupply, overprice and ultimately fail the people it exists to serve.
This crisis has been decades in the making and will not resolve itself. With deliberate, coordinated action across all levels of government, it can be reversed. The market is signaling that the system is broken. The question is whether policymakers are prepared to fix it.