Ontario’s Housing Slowdown: A Crisis in the Making for the GTA

For years, Canadians have been told that the country faces a housing shortage. Rising immigration, urban growth, and affordability pressures have fueled a national debate about whether we can build fast enough to meet demand. At first glance, the numbers seem reassuring—housing starts across Canada have been running strong, with more than one million new units started in the past four years. In fact, Alberta, Atlantic Canada, Quebec, and Saskatchewan are seeing some of their highest levels of construction in decades.

But hidden behind this national strength is a troubling outlier: Ontario.

According to a recent report from RBC, housing starts in Ontario—especially in the Greater Toronto Area (GTA)—have plummeted since mid-2024, reaching their lowest levels in over a decade. While other provinces continue building, Ontario is trending in the opposite direction. This is alarming not only because Ontario is Canada’s most populous province but also because the GTA is the epicenter of the nation’s housing crisis.

If Ontario can’t find a way to reverse this decline, the consequences for affordability and economic growth will be severe.

An RBC report makes clear that Canada as a whole is not in a housing starts slump—Ontario is. The country continues to build at an impressive pace, averaging more than 250,000 annualized housing starts in the first half of 2025. By comparison, the pre-pandemic 10-year average was closer to 201,000 units.

Much of this strength comes from provinces where housing remains relatively affordable. Alberta and Atlantic Canada are booming with new construction, driven by demand from both local residents and newcomers priced out of Ontario and British Columbia. Saskatchewan and Quebec are also seeing significant increases, while Manitoba maintains steady levels.

Ontario, however, is bucking the trend. Its six-month average for housing starts has fallen to the lowest level in ten years. This collapse comes at the very moment the province needs construction most. The Ontario government has set a lofty goal of building 1.5 million new homes in the next decade. With housing starts trending downward, that target looks increasingly unattainable.

Several interconnected factors are holding Ontario back:

1. Escalating Costs: Land, labour, and material costs have all risen sharply. Municipal development charges and fees pile on, making new projects extremely expensive. Builders simply cannot deliver housing at prices that average Ontarians can afford.
   

2. Resale Market Pressure: Ontario’s resale inventory has grown, offering buyers more choice at lower prices than new builds. This weakens demand for new projects.
   

3. Investor Pullback: Pre-construction condos, once the lifeblood of GTA housing starts, have lost investor interest. Rising interest rates, softer rental markets, and declining condo prices have led to a collapse in pre-construction sales. Without investor commitments, many projects never break ground.
   

4. Permits vs. Reality: Municipalities like Toronto are issuing more building permits than ever, but the projects aren’t moving forward. The problem isn’t approvals—it’s affordability. High costs prevent builders from acting on those permits.
   

In short, Ontario has reached a breaking point where the economics of building simply don’t work.

The slowdown in housing starts doesn’t mean the impact will be felt tomorrow. Many large projects that began during the pandemic are still completing, and more than 93,000 units remain under construction in the GTA. For now, the pipeline is still producing completions.

But what happens in 2026 and beyond is far more concerning. Housing construction takes years to materialize. The steep decline in housing starts today will translate into far fewer completions in the future. That means the GTA’s already dire housing shortage will only worsen just as population growth is expected to rebound when immigration levels stabilize.

This mismatch—falling supply alongside rising demand—sets the stage for even higher housing costs, deeper affordability challenges, and more social and economic strain on Ontarians.

The central question is whether Ontario can rein in the runaway costs of land, labour, materials, and municipal fees that are holding the market back. Without serious reforms, the province risks trapping itself in a cycle where housing remains unaffordable, construction slows further, and demand spills into other provinces.

That raises a second question: will Ontario’s soaring costs make it more “valuable” over time, like an exclusive market where only the wealthy can buy in? Or will affordability elsewhere in Canada encourage Ontarians to move out, taking their economic activity and talent with them?

We are already seeing early signs of this shift. Alberta, Atlantic Canada, and Saskatchewan have welcomed record numbers of new residents in recent years, many from Ontario. They’re attracted by lower home prices, growing job markets, and an overall better quality of life for the cost. If Ontario doesn’t correct course, this trend could accelerate, leaving the GTA as an enclave for the wealthy while younger families and middle-class workers build their futures elsewhere.

The RBC report highlights a sobering reality: Canada isn’t failing to build homes—Ontario is. And because Ontario, and particularly the GTA, sits at the heart of the housing crisis, this underperformance has outsized consequences for the country.