Canada is building at half the 500,000-home target—and building young people into renters
By: Editorial Board, 29 July 2026
June housing starts fell to an annualized 239,000 units while ownership construction plunges to a 30-year low. Ottawa’s response is a condo bailout.
Canada started homes at a seasonally adjusted annual rate of 238,971 units in June, down 6 percent from May and the second straight monthly decline. That is roughly half the 500,000 homes per year the Carney government promised, and below the 430,000 to 480,000 annual starts CMHC itself says Canada needs through 2035 just to restore pre-pandemic affordability. As Graeme Gordon reported, the trend is moving in the wrong direction—and what is being built increasingly is not for sale at all.
The composition of construction is the real story. For the first time on record, purpose-built rentals made up most new starts—about 58 percent from January to April—while BMO Capital Markets warns Canada is becoming a “nation of rentals” and describes the collapse in ownership-oriented construction as the kind normally seen only in recessions. Fully 81 percent of units under construction nationally are apartments, and starts intended for homeowners are headed for a 30-year low even as rental construction sets records.
This is not an accident of the market. It is the predictable result of federal policy. Ottawa eliminated the GST on purpose-built rentals, created an accelerated capital cost allowance for new rental construction, and extended low-interest loans to apartment developers—while development charges, sales taxes, and land-use rules keep pushing the cost of ground-oriented ownership housing above what buyers will pay. New homes carry a price floor: they must cost more than they cost to build, or they do not get built. Governments have loaded that floor with taxes and fees, and ownership construction has responded exactly as economics predicts.
Ottawa’s answer to this failure is worse than inaction. The Parliamentary Budget Officer projects Build Canada Homes will add just 26,000 units to national supply over five years against billions in earmarked spending—a rounding error beside the government’s target. Meanwhile, the prime minister is defending a $1.45-billion plan to buy roughly 2,200 unsold Vancouver condos from developers who refuse to sell at market prices. That scheme socializes developer losses, blocks the price correction that would let willing buyers purchase those units, and converts would-be owners into subsidized tenants. Housing Minister Gregor Robertson’s office declined to comment on the slowing starts.
The fix is not mysterious. A modernized federal-provincial HST New Housing Rebate would cut new home prices in Ontario by more than 10 percent without stimulating resale demand. Extending the GST rebate to all purchasers of primary residences—with Ontario’s indicated matching—would knock 13 percent off a new home’s cost. Ontario’s 2026 budget helpfully already includes a policy rebating the full 13 percent HST for all qualifying new-home buyers (not just first-time buyers), for an April 2026–March 2027 window. Development charges in Ontario and B.C. must fall, and buyers must stop paying sales tax on those charges. Governments already stand to lose more than $6 billion in tax revenue from the GTA construction slowdown alone; the fiscal excuse for inaction is gone.
The stakes are generational. Nearly 40 percent of Canadians aged 20 to 34 now live with their parents—47 percent in Toronto—and 40 percent of renters have given up on ever owning. If Ottawa keeps subsidizing rentals and bailing out developers while taxing ownership housing out of existence, it will have built exactly the country those numbers describe: one where homeownership is an inheritance, not an expectation.
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www.thehub.ca/2026/07/29/canada-is-building-at-half-the-500000-home-target-and-building-young-people-into-renters/
