Ontario's housing plan in crisis amid construction slowdown and financial woes

Time of India

20-05-2025

For thousands of Ontarians dreaming of a new home, the promise of 1.5 million new houses by 2031 is starting to feel like a distant hope.
Ontario
's recent budget forecasts and industry challenges cast doubt on the province's ability to meet its housing goals, jeopardizing its plan to build 1.5 million new homes by 2031.
The 2025 budget projects 71,800 housing starts for the year, a decrease from 74,600 in 2024. Projections for 2026 and 2027 are modestly higher at 74,800 and 82,500, respectively.
But these figures fall significantly short of the annual average of 150,000 homes needed to reach the 1.5 million target by 2031.
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Since the target was set, only about 260,000 homes have been started over three years. To meet the goal, the province would need to more than double its annual housing starts in the remaining years.
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In other words, to meet the target, Ontario would need to build an average of 218,000 homes each year over the next five years, more than twice the yearly rate achieved so far.
The government's housing start tracker hasn't been updated since October 2024. At that time, nine months into the year, only 11 out of 50 municipalities had met their annual targets.
Key factors behind Ontario's housing slowdown
Several factors contribute to the slowdown in housing construction.
The re-imposition of tariffs by U.S. President
Donald Trump
has increased the cost of building materials, further straining the housing sector. Industry experts warn that these tariffs could lead to a prolonged slump in construction, with some municipalities experiencing significant declines in housing starts.
Although Ontario's slowdown in housing construction began even before U.S. President Donald Trump returned to the
White House
and introduced new tariffs. The 2024 budget had projected 87,900 housing starts for the year, but the actual figure, reported in this year's budget, fell short at just 74,600.
Housing starts were already significantly down in 2024; this means more projects go unsold, get converted to rentals, or stop construction and go into receivership.
Response from the authorities
The Ontario government has introduced measures aimed at stimulating housing construction in response to these challenges.
The budget of 2025 allocates $400 million to municipal infrastructure projects and commits $50 million over five years to expand modular housing capacity. However, critics argue that these initiatives are insufficient.
Eric Lombardi, president of More Neighbours Toronto, expressed skepticism as he said, "The government should acknowledge that it's clearly not going to make that target." He described the budget's housing measures as ineffective, suggesting the Ford government "has given up on its own housing goals and has no interest in really achieving its prior promises on this file."
The Building Faster Fund, a $1.2 billion program designed to incentivize municipalities to meet housing targets, has seen limited success.
Only $280 million was distributed in 2024, as more than half of Ontario's municipalities failed to meet their housing start benchmarks.
Peter Bethlenfalvy, the Finance Minister of Ontario, remains confident in the government's commitment to the housing target and said, "We're not going to relent on trying to achieve that goal," he said.
He expressed optimism about increased federal support under Prime Minister Mark Carney's administration, which could potentially ease funding constraints.