Toronto and Vancouver Impact Housing Starts in First Half of the Year: CMHC
In the first half of 2025, housing construction trends in Canada revealed a complex landscape shaped by regional variances and a slowing market for ownership housing. According to the Canada Mortgage and Housing Corporation (CMHC), cities such as Calgary, Edmonton, Montreal, Ottawa, and Halifax recorded impressive housing starts, primarily driven by an upsurge in rental apartment construction. However, contractions in Canada’s major metropolitan markets—specifically Vancouver and Toronto—significantly affected the overall performance of the housing sector.
Vancouver experienced a notable decline in housing starts, with the city reporting a 13.4% drop in condominium construction. This decline was largely attributed to weak pre-construction sales, triggering a slew of paused or canceled projects. The CMHC identified development charges as a critical hindrance to homebuilding in Vancouver, though the upcoming provincial regulations allowing for the deferral of development charges until occupancy may offer some relief. Meanwhile, Toronto is on a trajectory to record its lowest annual housing starts in three decades, with a striking 60% reduction in condominium projects, reflective of diminishing investor demand and project feasibility challenges.
In contrast, the report highlighted optimistic trends in other regions. Calgary, for instance, set new records in housing starts, buoyed by positive economic indicators and a burgeoning population. The municipality’s updated zoning regulations, which encourage greater density through laneway housing and secondary suites, are facilitating increased rental construction. Edmonton also saw gains, benefiting from higher levels of construction in both apartment and single-family home segments.
Despite the positive developments in several cities, CMHC’s deputy chief economist, Tania Bourassa-Ochoa, cautioned that the overall industry confidence remains fragile due to systemic challenges, including high development charges and lengthy approval processes. These barriers could impede future supply and adversely impact housing affordability and workforce retention across the sector.
Looking ahead, CMHC forecasts a gradual recovery in housing starts across larger metropolitan areas, with improvements likely remaining modest through 2027. The implications of these trends bear significant weight on the future of Canada’s housing market, calling for comprehensive structural changes to enhance cost and time efficiencies. For construction professionals, this report underscores the necessity for strategic adaptations in project planning and execution to navigate the evolving landscape of the Canadian housing sector.
📋 Article Summary
- Cities like Calgary and Edmonton experienced strong homebuilding activity, particularly in rental apartments, with some reaching record construction rates.
- In contrast, Vancouver and Toronto faced significant declines in housing starts, with Toronto heading toward its lowest totals in three decades, primarily due to reduced condominium demand.
- Development charges and lengthy approval processes are hindering confidence in the residential construction sector, affecting future housing supply and affordability.
- Despite positive trends in certain regions, overall recovery in housing starts is anticipated to be gradual, with only modest improvements expected by 2027 amid economic uncertainties.
🏗️ Impact for Construction Professionals
The recent CMHC report on housing starts presents both opportunities and challenges for construction professionals. With a surge in rental apartment construction across many cities, there’s a clear invitation for builders to pivot towards developing more rental units, especially in markets like Calgary and Edmonton. This could mean leveraging government incentives for purpose-built rentals to secure contracts.
However, the slowdown in Toronto and Vancouver highlights significant risks—specifically the impact of high development charges and lengthy approval processes. To address this, project managers and contractors should advocate for streamlined processes and consider forming coalitions to address these systemic barriers.
Actionable insights include conducting market analysis to identify emerging opportunities in rental construction, adapting project bids to be more competitive amidst economic uncertainty, and advocating for policies that lower costs. Strategic planning should incorporate flexibility to adjust to market demands and increased emphasis on rental developments, allowing businesses to position themselves favorably in a shifting landscape. Ultimately, staying agile in response to market dynamics will be crucial for sustaining operations and profitability.
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