After a year, pace of housing construction down, not doubled

By Tom Parkin

June 17th, 2026

BURLINGTON, ON

Carney and Ford try to reinflate Ontario market with $2.2 billion tax plan that has some housing experts worried the goal is to hike starts by boosting housing prices and rents.

Housing unit starts, monthly.

In the campaign leading up to the April 28, 2025 federal election, Liberal leader Mark Carney pledged to double the pace of housing construction. But a year later, construction starts are lower than when the Liberals won.

There were 23,900 housing starts in May 2025. That’s 1,300 fewer than the 22,600 units started in May 2026, according to Statistics Canada data released Tuesday and derived from Canadian Mortgage and Housing Corporation.

Only in Prince Edward Island and Nova Scotia are housing starts higher than a year ago, data shows.

Ontario only 25% of housing starts in May

But the central problem is Ontario. Though the province includes nearly 40 per cent of the country’s population, only 25 per cent of May 2026 housing starts were in Ontario, according to CMHC. And as today’s chart shows, the low share in May is not an exception over the past year.

Ontario has been the epicentre of the housing market crash resulting from the unchecked massive price increases during the ultra-low interest rate period of 2020-2022. In less than 24 months, the average benchmark house price in the Greater Toronto Area increased by over 50 per cent. Federal and Provincial housing policies didn’t help, adding billions in cheap credit and tax incentives that pumped demand even more, rather than stress-testing buyers to cool prices and prepare new buyers for an inevitable upturn in interest rates.

Since the market bust in March 2022, Greater Toronto Area housing prices may not have returned to earth, but they’ve certainly fallen toward it, now down in the range of 25 per cent. Housing rental prices have fallen in tandem.

Now five year mortgages signed at ultra-low rates on ultra-high prices in 2021 and early 2022 are coming due. That’s causing fear among some housing owners that their new mortgage payment will be unaffordable. But now there’s also fears from bankers that delinquencies will leave their banks with assets that have a market lower than the outstanding mortgage.

Carney-Ford HST plan risks hike to housing prices, rents

Recently Prime Minister Mark Carney and Ontario Premier Doug Ford have entered into a deal they say will revive housing construction.

But some housing experts are concerned the idea behind their HST rebate plan is to spur construction by pushing up housing prices and rents.

The $2.2 billion plan by Carney and Ford rebates the HST on new home sales to the purchaser. While the prime minister and premier no doubt want people to focus on the new owner-occupiers who will benefit, a large chunk of the $2.2 billion will go to investor-speculators.

According to housing expert Jeremy Whithers, over the past 10 years, investors accounted for 57 per cent of new condominiums purchases and 20 per cent of new house purchases. So right off the bat, a very large percentage of the $2.2 billion will go to investor-speculators, not owner-occupants.

But the concern runs deeper. Rebating the HST on investment in new housing units dramatically juices the returns. If an investor buys a $1 million dollar house, pays $130,000 in HST and sells it at $1.2 million sometime later, the return is $70,000 or seven per cent. But with the HST rebate, the return on the same investment becomes $200,000 or 20 per cent.

Extending the HST rebate to investor-speculators will induce a wave of investor demand that may spur construction, but also restart housing inflation. And while that’s great for banks worried about covering their loans, it’s bad news for affordability.