Canada’s housing crisis is at a crossroads. Home prices are falling nationally, but housing remains unaffordable in many cities. And in British Columbia and Ontario, price declines have helped trigger a decline in homebuilding, which threatens to negate any gains in affordability—not only for residents of those provinces, but the whole country.
It doesn’t have to be this way. More homes would be built in Ontario and B.C. today, at more affordable prices, if municipal governments reduced development costs and eased zoning rules that limit the range of housing styles and where they can be built. It’s past time policymakers got serious about tackling these policy barriers to new housing.
First, let’s be clear about the state of housing affordability in Canada. Nationwide, a typical home of any style (single-detached, townhome, apartment), new or resale, cost $685,600 in 2025. That’s 2.7 per cent lower than in 2024, and 12.1 per cent lower than the all-time peak in 2022.
Any price relief is a boon to homebuyers and renters. But for many Canadians, today’s prices are hardly “affordable.” Despite recent declines, home prices in 2025 were still 32.3 per cent above 2019 levels when many Canadians were already struggling to afford a home. If our incomes were growing faster, today’s still-high home prices would be more manageable. But unfortunately, many family incomes have not kept up, which is unsurprising given Canada’s weak economy.
Which brings us back to the double-edged sword—recent price declines haven’t restored affordability but have made some homebuilding projects financially unworkable. How much construction slows in a cooling market depends, in large part, on municipal policies.
Start with development charges. Homebuilders in Toronto must budget for a whopping $134,900 of development charges per home for high-rise housing developments. In Vancouver, these charges amount to $122,200 per unit. Meanwhile, in Halifax these charges are $8,000 per unit, and in Edmonton they’re $6,900 per unit. Put simply, other cities get by with much lower development charges.
Zoning rules are also more restrictive in Ontario and B.C. than in other provinces. In B.C.’s Lower Mainland, policies that preserve agricultural land compound the region’s natural geographical constraints. And where housing development is allowed, large areas remain exclusively zoned for single-detached homes or duplexes. In Ontario, the Ford government has rejected its own Housing Affordability Task Force’s recommendation to allow fourplex developments across the province without special approval from municipal councils—and that’s only one example among many restrictions that weigh on new housing supply in Ontario.
These strict zoning regimes contribute to another housing barrier: long and uncertain approval timelines. Builders in Toronto must endure a grueling 25-month approval process (on average) just to find out whether their housing project will receive municipal approval, compared to 7.7 months in Vancouver and 4.2 months in fast-growing Calgary. Approval delays add costs and uncertainty that can derail otherwise viable housing projects.
These policy barriers help explain why trends in housing starts are diverging between provinces.
Nationally, the number of new homes brought under construction in 2025 grew by 5.9 per cent relative to 2024. But the picture is very different across regions. Housing starts were up in the Prairie provinces (+16.2 per cent), Atlantic Canada (+20.4 per cent) and Quebec (+31.5 per cent) but fell in B.C. (-4.7 per cent) and Ontario (-13.3 per cent).
Declining homebuilding in Ontario and B.C. partly reflects faster price declines. Again, in any cooling market, fewer projects pencil out. But Ontario and B.C.’s home prices are falling from much higher peaks—and prices remain higher than in much of the country—in part because high development charges, restrictive zoning and long approval timelines made it harder to build enough homes during the boom. Now, as prices soften, those same constraints amplify the construction slowdown.
Ontario and B.C. are a big part of Canada’s housing market. When homebuilding falls in these provinces, national progress on housing affordability slows, too. If policymakers want falling prices to lead to lasting affordability—not a deeper construction slump—they should reduce development charges and reform zoning rules.
Austin Thompson is an analyst at the Fraser Institute.
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