Toronto’s homebuilding activity in the first half of 2025 was the lowest on a per-capita basis since 1996, according to a new report from Canada’s national housing agency.
The 44 per cent drop in housing starts overall was driven by a 60 per cent year-over-year decrease in condo starts, the new “Housing Supply Report” by Canada Mortgage and Housing Corp. (CMHC) found.
“A pullback in investor demand during the first half of 2025 reduced project feasibility, leading to cancellations, delays, and a sharp drop in construction,” the agency said in a press release, adding that many industry actors are calling for reduced construction costs and development charges.
Record-low preconstruction sales drove construction to its lowest level since 2009, or 1996 on a population-adjusted basis, the report noted, as 70 per cent of pre-construction sales are required for developers to secure financing.
Industry sources say investors had been the primary buyers of pre-construction condos in recent years, “before they became increasingly discouraged by reduced profitability,” the report said.
“Attracting a wider buyer pool beyond investors may result in less volatility in supply when the appeal of investment condominium apartments fluctuates,” it noted.
While economic uncertainty deterred some buyers from the market, many others turned to resale, which tended to offer “a vast supply of units that were lower priced, larger and potentially more suitable to their needs.”
Competitive prices for new condos, along with better macroeconomic conditions, could encourage more people to buy, the report said.
Rental apartment starts, meanwhile, decreased eight per cent compared to the same time period in 2024, remaining “well above” their 10-year average.
The decline for the purpose-built market was slowed thanks to optimism among rental developers, government financing incentives and lower land prices, the report said.
Condo construction has supplied much of the region’s rental housing in recent decades, the report added, and the downturn in construction “makes it vital to maintain a steady and growing stream of rental construction.”
According to Urbanation, the report noted, nine condo projects have been converted into rental apartments since 2024 as developers have seen better financial prospects in rentals.
The report warned that the construction slowdown of all housing types “could put further pressure on affordability” in the long-term when economic conditions improve and demand picks up.
