Housing Starts in Canada: A Complex Landscape
In a landscape dominated by fluctuating economic conditions and regional disparities, the Canada Mortgage and Housing Corporation (CMHC) recently released a report indicating a flat growth in overall housing starts during the first half of 2025, when compared to the previous year. However, while the national figures paint a picture of stagnation, a closer examination reveals a patchwork of vibrant construction activity in certain regions, particularly driven by rental apartment projects.
Regional Highlights: Growth in Specific Cities
Certain Canadian cities have demonstrated resilience and remarkable growth in housing construction. Cities like Calgary, Edmonton, Montréal, Ottawa, and Halifax reported building rates that were either at, or near, record levels or in line with historical averages. The driving force behind this upward trend has been the construction of rental apartments, which has surged due to various local factors including population growth and supportive government policies.
Calgary: Leading the Charge
Calgary stands out with housing starts reaching a historic peak. The city’s construction boom can be attributed to positive perceptions regarding its growth trajectory. Strong population dynamics, along with favorable zoning and financial programs, have facilitated this surge. Notably, updated municipal zoning laws, which encourage the development of laneway housing and secondary suites, have contributed significantly to greater urban density, making Calgary a model for other Canadian cities.
Edmonton: A Balanced Approach
Similarly, Edmonton has benefited from increased construction activity both in apartments and single-detached homes. This balanced approach caters to diverse housing needs, reflecting the city’s adaptability to market demands. The combination of higher construction levels and a growing population highlights Edmonton’s potential as a future hub for housing development.
Challenges in Major Markets: Toronto and Vancouver
Despite encouraging trends in several regions, the report draws attention to the struggles faced by Canada’s two largest real estate markets—Toronto and Vancouver—both of which significantly influenced national housing starts statistics.
Toronto: A Stark Decline
Toronto is projected to finish the year with the lowest total annual housing starts in nearly three decades. A staggering 60% drop in condominium starts, coupled with weaker investor demand for such developments, has made many projects less feasible. This sharp decline not only reflects current market conditions but also raises concerns about future housing supply and affordability, as developers face increased pressure from development charges and a lengthy approval process.
Vancouver: Slowing Momentum
Vancouver, too, is experiencing challenges, with a 13.4% decline in housing starts within the same timeframe. Many projects have been paused or canceled due to weak pre-construction sales. CMHC highlights that high development charges in Vancouver remain a significant barrier to new homebuilding. However, hopeful regulatory changes are on the horizon, allowing for deferral of a substantial portion of these charges until occupancy, potentially easing some financial pressures.
The Role of Rental Housing
Amid these challenges, CMHC emphasizes a notable increase in purpose-built rental housing across the country. Enabled by government support and incentives, purpose-built rentals now account for an ever-increasing share of total apartment construction. This trend is vital as it addresses growing demand for affordable housing, particularly in urban centers experiencing rapid population growth.
Industry Expert Insights
Tania Bourassa-Ochoa, CMHC’s deputy chief economist, provided crucial insights regarding the current housing landscape. She remarked, “While the increase in rental construction in the first half of 2025 was encouraging, the ongoing construction slowdown in the home ownership market poses risks to future housing supply, workforce retention, and affordability.” Her commentary underscores the delicate balance needed in the housing market to accommodate varied needs, from renters to prospective homeowners.
Bourassa-Ochoa also pointed to the systemic changes required in Canada’s housing system to cultivate an environment conducive to increased supply, noting the impact of high development charges and protracted approval timelines on overall confidence in the industry.
Looking Ahead: Future Projections
The report outlines a cautiously optimistic outlook for Canadian housing starts. Although the bigger metropolitan areas are expected to undergo a gradual recovery, significant improvements are only anticipated by 2027. Factors such as economic uncertainty, trade tensions, and lowered immigration targets will continue to challenge the housing market, necessitating strategic planning and proactive policymaking.
Conclusion
In summary, while some Canadian cities are thriving with substantial growth in housing starts, other major markets face steep declines. The contrasting trends highlight the importance of localized strategies in addressing housing supply and affordability issues. Going forward, fostering an environment conducive to streamlined construction processes and affordable rental options will be crucial in shaping the future of Canada’s housing market. As the country navigates these complexities, the need for systemic improvements becomes increasingly paramount to ensure the sustainable growth of affordable housing for all Canadians.
