Housing shortages may worsen with no measures to spur construction in Canada budget 2025, development industry says

Developers believe the government is overly focused on housing starts, which will likely shrink as a result of today's sales shortfall, leading to fewer units being built in the future. Photo by THE CANADIAN PRESS/Jonathan Hayward

Article content

A coalition of development industry leaders is sounding the alarm over what was not included in the federal budget this week, suggesting that housing shortages will worsen due to the lack of programs to spur construction.

Article content

The Large Urban Centre Alliance, backed by the Building Industry and Land Development Association said the inaction will cost jobs as the construction sector pulls back on new homes amid falling sales.

Article content

Article content

Article content

“Sales are evaporating straight across the country,” said Justin Sherwood, chief operating officer of BILD. “As the (lack of) sales activity from years gone by works its way through the system, you are going to have a situation where 100,000 people have lost their jobs.”

Article content

Article content

BILD views the situation as dire and believes the government is overly focused on housing starts, which will likely shrink as a result of today’s sales shortfall, leading to fewer units being built in the future.

Article content

Year-to-date sales are down 82 per cent in the Greater Toronto Area, 81 per cent in the Greater Golden Horseshoe, 67 per cent in Vancouver, 40 per cent in Calgary, and 33 per cent in Edmonton, the group said. Montreal condominium apartment sales have dropped by 75 per cent.

Article content

Sherwood said his group was seeking the extension of the GST/HST rebate beyond just first-time buyers to all buyers and believes that the federal government budget’s language backs away from a commitment to reduce development charges by 50 per cent on housing.

Article content

There was also wide-scale disappointment that the budget had no mention of a multi-unit residential building program, or MURB, a popular policy from decades ago that the sector believes would recapitalize the industry.

Article content

Article content

Previous programs allowed investors to claim depreciation and certain other costs of an apartment building against unrelated income, effectively incentivizing the construction of rental units.

Article content

Article content

Estimates suggest that the program helped fund the construction of approximately 195,000 units at a cost at the time of $2.4 billion through lost tax revenue, Sherwood said.

Article content

“You are going to look at a significant decrease in housing starts and essentially no supply, setting up the preconditions for another affordability spike down the road,” he said.

Article content

While Sherwood’s group was disappointed, Canada’s largest apartment landlord, Starlight Investments, sees upside in the budget that will give it reasons to plan more development projects due to the infrastructure now being planned.

Article content

The announcement of a new fund should encourage his industry to build more multifamily units, even though his company is already actively involved in development, said Howard Paskowitz, vice-president of development and public affairs at Starlight.

Article content

Ottawa’s Build Communities Strong Fund, to be administered by Housing, Infrastructure and Communities Canada, proposes $51 billion in funding over a decade starting in 2026-27.