Cost of building new homes across the province is simply too high
By Richard Lyall
for The Toronto Sun
Feb. 13, 2026
Ontario’s housing crisis didn’t happen overnight. It’s been decades in the making, caused by overly restrictive policies and regulations, slow approvals, excessive red tape and exorbitant taxes.
Half-measures and incremental change will not cut it. The data shows that the industry has clearly hit a wall. To correct course, we need governments to fire all their guns at the same time.
New home sales have collapsed across Ontario and beyond, not just in downtown Toronto or Vancouver, but in cities large and small, and in markets like Calgary, Edmonton and Kitchener-Waterloo.
The cost of building new units is too high to compete with the resale market. Condo apartment starts are down 51 per cent across most municipalities in the Greater Golden Horseshoe.
Just 5,300 new homes sold in the GTA in all of 2025 - the worst year in 45 years of record-keeping. December sales were down 82 per cent from the 10-year average.
In the City of Toronto, new ground-oriented and condo apartment sales plunged from roughly 40,000 units in 2021 to about 2,000 in 2025. In Kitchener, Waterloo and Cambridge, sales fell from 2,000 to just 250 over the same period.
The Canadian Centre for Economic Analysis is forecasting that there will be a deep and persistent slowdown in new housing relative to the 10-year average. The anticipated scenario implies roughly 36 per cent fewer starts and 39 per cent fewer completions than the 10-year average.
Economic modelling suggests that about 35,000 residential construction workers in Ontario could be displaced on average.
In a keynote speech at RESCON’s recent annual general meeting, Premier Doug Ford addressed the issue squarely and was unequivocal, stressing that housing is critical to Ontario’s economic prosperity, and he is ready and willing to work with builders to get shovels in the ground faster.
Ford’s remarks were encouraging and left little doubt leaders know what must be done. It was clear from his remarks - and those made by others at the meeting - that the provincial and municipal governments understand the challenges ahead and are determined to act further and decisively.
The housing outlook, as confirmed by economist Mike Moffatt of the Missing Middle Initiative, is grim.
A recent report card he did for RESCON showed that the housing weakness in the Greater Golden Horseshoe extends well beyond the condo market. Based on the state of new home sales, the report indicated that things are likely going to get worse in the region before they get better.
Demand has fallen sharply, yet construction costs have not followed suit. Prices may be down roughly 20 per cent from their peak, but the cost to build remains stubbornly high. The result is a market where builders cannot compete, so projects are shelved and supply dries up further.
To its credit the provincial government has already taken steps to streamline approvals, reduce red tape, build housing-enabling infrastructure and remove the provincial portion of the HST on new purpose-built rental housing.
A rebate on the eight-per-cent provincial portion of the HST for first-time buyers of new homes up to $1 million and on a sliding scale for first-time buyers of new housing between $1 and $1.5 million is scheduled to go into effect when the feds pass a five-per-cent GST rebate.
The province also announced another $1.6 billion for the Municipal Housing Infrastructure Program to speed up construction on homes and projects like roads, bridges and water systems. The program has enabled the construction of 800,000 homes across Ontario since 2014.
These measures are important and they matter. But as the premier himself acknowledged, more action is needed.
Cutting sales taxes for all new home buyers would be a good start. Lowering development charges and accelerating approvals further would also change the economics of homebuilding.
As Ford observed, if people aren’t buying, governments aren’t collecting revenue anyway. Lower costs would spark construction activity, create jobs, and generate economic spinoffs across Ontario.
It is time to pull out all the stops. Leaders know what needs to be done to cut through the housing Gordian Knot. The commitment and understanding are there. Now, the action must follow.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.