Canada has begun to treat housing reform with urgency, rolling out tax rebates and programs that lower development charges to spur new construction, a shift highlighted at a recent summit organized by the Residential Construction Council of Ontario. The initiative is presented as a key element of the government’s effort to make housing more affordable for a growing population.
Experts weigh in on recent reforms
Ian Lee, associate professor at Carleton University’s Sprott School of Business, told attendees that progress is evident but incomplete, noting “good stuff has happened” while emphasizing the need for further action. He added that the measures introduced so far represent a step forward, yet they do not fully address the underlying market forces.
Federal and provincial officials have publicly recognized that excessive taxes, fees and regulatory delays contribute to rising home costs, prompting measures such as GST and HST rebates for newly built houses that aim to improve affordability. Their statements show a willingness to adjust fiscal policy in response to mounting pressure from consumers and industry groups.
Municipalities are also seeing development-charge relief initiatives, encouraging them to reconsider how infrastructure for growth is financed, a move described by speakers as a meaningful policy adjustment. This change is expected to give local governments more flexibility when planning new neighbourhoods.
Despite these steps, several presenters cautioned that the changes fall short of addressing the scale of the housing shortage. Their concerns focus on the gap between policy announcements and the tangible increase in housing units that buyers actually see on the market.
Supply shortfall persists
Nationally, new-home starts average about 250,000 units per year, while analysts estimate a requirement of between 400,000-470,000 to restore affordability and close the deficit. This disparity highlights the challenge of meeting demand with current construction rates.
Even after the federal government lowered immigration targets, construction activity remains below demand, creating a supply gap that has been widening for years. The reduced influx of new residents has not translated into a proportional slowdown in housing need.
According to Canada Mortgage and Housing Corp., year-to-date starts reached 149,542 units in August, a 4% decline compared with the same month in the previous year. The drop signals that momentum in the sector is slipping despite recent policy incentives.
Market response and regional gaps
In the Greater Toronto Area, the resale market shows signs typically linked to recovery: better affordability, moderated mortgage rates, softened prices and tightening inventory, which under normal conditions would boost sales. These indicators suggest a tentative improvement in buyer confidence.
However, many prospective buyers remain hesitant, citing trade tensions, lingering inflation, global instability and uncertainty about future interest-rate moves. Their caution reflects broader economic concerns that extend beyond housing alone.
Although the income needed to purchase a typical GTA home has fallen noticeably over the past two years, consumer confidence has not risen proportionally, leaving a pool of unmet demand. This mismatch points to lingering risk aversion among would-be owners.
Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board, suggested that if economic conditions stabilize, housing activity could rebound quickly. He warned that any resurgence will depend on the durability of recent policy measures.
Daniel Foch of Valery Real Estate highlighted a growing divide: Ontario and British Columbia retain some of the highest price-to-income ratios, limiting ownership for younger families, while Alberta and Atlantic provinces remain comparatively affordable. This regional contrast shows the uneven impact of national reforms.
Recent federal GST and HST relief measures have revived pre-construction activity, with new-home sales improving from the lows recorded in 2024 and tax cuts appearing to stimulate buyer interest rather than merely increase builder margins.
