The data shows a steep drop in housing starts across Ontario, driven largely by low demand caused by high mortgage rates and ongoing economic uncertainty. Developers are pausing new projects—a trend that could further reduce the supply of new homes. With construction activity already at a low point, the pipeline of future housing stock is at serious risk of shrinking.

The slowdown comes down to one main factor: unfavorable borrowing conditions. Everything else that drives prices upward—population growth, immigration, and persistent supply shortages—remains firmly in place.

Now consider this: if home prices kept climbing even during peak construction years, what will happen when housing starts drop by 58%, remain low for an extended period, and interest rates eventually fall to stimulate the economy?

​Chances are, buyers won’t like the answer.

The pause in construction makes the problem worse. Because of the long lead time between planning and completing new homes, the impact of today’s low building activity will be felt for years​.

If low building activity continues over the next five years, Ontario’s home prices will likely face upward pressure. History shows that even during periods of high construction, shelter costs have tended to rise—so with insufficient new supply, price growth could accelerate even faster.

While high mortgage rates and economic uncertainty may suppress demand in the short term, a future combination of stable or declining rates, government incentives, and pent-up demand could collide with limited supply, pushing prices sharply higher.
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Affordability is expected to worsen over the next five years unless significant policy changes are implemented. Families already spending 38%–41% of their income on housing may find homeownership increasingly out of reach.

The current low demand and developer hesitancy—driven by high mortgage rates and economic uncertainty—threaten to create a supply shortage that could push prices sharply higher in the future.

As homes become increasingly unaffordable for first-time buyers in Ontario, a new trend has emerged: co-ownership. Two or three young families can purchase a legal duplex or triplex together, making ownership attainable by sharing both the initial and ongoing expenses.
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