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Ontario’s Housing Crunch: What’s Really Going On (2025 Analysis)

Posted on September 23, 2025 by Sami Chowdhury

Introduction

In Ontario, 2025 is shaping up to be a tough year for housing. For a province that set out to build 1.5 million homes by 2031, the current pace of construction is nowhere near what’s needed. Homebuilding is falling behind across almost all metrics—housing starts are down, targets are being missed, many would-be buyers are priced out, and developer and municipal challenges are being exposed.

This post digs into the data, what’s causing the slowdown, how Ontario compares with other provinces and what policy options might help turn things around.

What the Data Tells Us: How Bad is the Shortfall?

From several sources:

Ontario has achieved only about 26% of its 2025 housing starts target so far by August.
Compared to 2024, housing starts in Ontario are down ~23%.
The number of housing starts in the first half of 2025 was ~27,368 — roughly 25% lower than the same period in 2024.
In Toronto specifically, homebuilding has dropped substantially, especially in the condominium segment, which is dragging down overall numbers.

Measure	Change / Status
Housing starts in Ontario vs 2024	Down ~23%
Housing starts vs target	Only ~26% achieved mid-year
Condominium starts, especially in Toronto	Sharp decline
Rental housing starts	Up in some measures, but not enough to offset ownership shortfall

Why Ontario is Falling Behind: Main Causes

There isn’t just one issue, but several overlapping ones:

1. High Construction & Development Costs

Land prices, labour wages, material costs are all up.
Development charges, municipal fees, and regulatory charges add further burden.

2. Low Investor Confidence & Falling Pre-Sales

In the condominium/pre-construction market, declining interest from investors has delayed or canceled many projects.

3. Long Delays & Approval Bottlenecks

Municipal planning delays, slow zoning approvals, and outdated permit processes have stalled many developments.

4. Regulatory & Policy Challenges

Recent legislation has aimed to ease supply constraints, but there is a lag in implementation and enforcement.

5. Demand vs Supply Mismatch

Rapid population growth and insufficient housing stock is putting pressure on affordability.

6. Interest Rates & Economic Uncertainty

Elevated interest rates increase borrowing costs for both developers and buyers.

Provincial Government Goals vs Reality

Ontario has set ambitious housing targets:

Build 1.5 million homes by 2031.

However:

2025 starts are far below what’s needed to meet the 2031 target.
Delays in implementing policies mean that the province is falling further behind.

Comparisons: How Ontario Stacks Up to Other Provinces

Quebec, Alberta, and Atlantic Canada are seeing growth in starts.
Ontario is among the worst performing provinces relative to its goals.
Rental starts in other provinces are growing faster and approval processes are more efficient.

What Happens if Things Don’t Change?

1. Worsening Affordability

Supply constraints will keep prices elevated.

2. Housing Supply Shortage

Continued under-building will exacerbate housing deficits.

3. Increased Costs

Reduced builder confidence will lead to fewer projects and higher prices.

4. Social & Economic Impacts

Increased homelessness, inequality, and pressure on municipal infrastructure.

Possible Policy & Practical Solutions

Reduce development charges or defer them until occupancy.
Streamline approval and permitting processes.
Encourage purpose-built rental construction.
Incentivize missing-middle housing.
Utilize public land for housing.
Offer tax incentives and rebates for affordable development.

Outlook: What to Watch in Late 2025 & Beyond

Interest rate movement.
Legislative implementation.
Pre-sale market recovery.
Municipal infrastructure upgrades.
Federal investment effectiveness.

Conclusion

Ontario’s housing market in 2025 is at a crossroads. Ambitious targets have been set, but the tools and political will to achieve them may be lacking. With the right combination of incentives, streamlined regulation, and federal-provincial coordination, the province can change course. But until then, the supply gap will grow, affordability will worsen, and everyday Ontarians will continue to feel the pinch.

References

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