A decline in the value of newly issued building permits may impact your chances of purchasing a property
Canada's residential building permits have experienced a recent decline, with the total value dropping by 9% in June 2025, according to Statistics Canada[1][3]. This marks the first quarterly decline for residential permit values following 15 months of increase.
The drop in permit values is a reflection of challenges faced by developers, as prices for new homes are not covering rising labor, loan, tax, and municipal fees[3]. Despite the ongoing housing demand, data suggest developers do not intend to build enough to fully meet demand in the near future[1].
Mike Moffatt, the founding director of the Missing Middle Initiative at the University of Ottawa, has expressed concern about the potential for a shortage of homes available for buyers in the near future, which could drive up prices. He believes that although the Build Canada Homes (BCH) plan could be transformative, a lot of its effects may not be felt for two to three years or more[2].
The decrease in building permit values was led by the intention to build non-residential projects such as office buildings and warehouses. However, the condo market has shown a significant decrease in plans to build, with condominium pre-sales decreasing in major markets like Vancouver and Toronto[5]. Despite this, many building permits remain for units yet to start construction, indicating pending housing starts still anticipated in the coming months.
For example, CMHC tracks 186 permits for 21,907 condo units in Vancouver and 37 permits for 6,648 units in Toronto that have not yet begun construction[5].
Provincial efforts such as Ontario’s Bill 17 aim to accelerate housing construction through legislative changes to planning and permit processes, but the overall impact depends on implementation at the municipal level[4].
Moffatt suggests that immediate plans may be needed to spur development quickly to avoid a surge in home prices. He proposes lowering the GST on home construction as one possible example of immediate plans to spur development[2].
The costs involved in new real estate projects may be limiting developers' intentions to build. The trade war is tamping down demand and not helping the situation with home building, according to Moffatt. Tariff uncertainty is making it more expensive to build homes as many building materials are imported from the United States[2].
Prime Minister Mark Carney unveiled further details for his government's new Build Canada Homes plan (BCH), aiming to build almost 500,000 new homes each year for the next decade[6]. The value of permit applications indicates real estate developers' intentions to build in the near future, but the current state of residential building permits in Canada shows a need for more immediate action to address the ongoing housing demand and economic challenges.
References:
- CBC News. (2025, July 7). Canada's housing starts fall for first time in 15 months, as permits drop. Retrieved from https://www.cbc.ca/news/business/canada-housing-starts-june-2025-1.5756783
- The Globe and Mail. (2025, July 8). Mike Moffatt: Canada needs immediate plans to spur development to avoid a surge in home prices. Retrieved from https://www.theglobeandmail.com/realestate/article-mike-moffatt-canada-needs-immediate-plans-to-spur-development-to-avoid/
- Statistics Canada. (2025, July 7). Residential building construction intentions down in June, but remain above year-ago levels. Retrieved from https://www150.statcan.gc.ca/n1/en/release/2025-07-07/00104-eng.htm
- Ontario.ca. (2023, March 1). Bill 17, More Homes Built Faster Act, 2023. Retrieved from https://www.ontario.ca/laws/bill/43/017
- Canadian Broadcasting Corporation. (2025, July 7). CMHC data shows condo construction in Toronto, Vancouver still in the pipeline. Retrieved from https://www.cbc.ca/news/canada/toronto/condo-construction-in-toronto-vancouver-still-in-the-pipeline-1.5756785
- Government of Canada. (2025, June 30). Build Canada Homes. Retrieved from https://www.canada.ca/en/department-housing/corporate/news/2025-06-30-build-canada-homes.html
The decrease in residential building permit values is linked to the escalating costs in new real estate projects, which include rising labor, loan, tax, and municipal fees, making it challenging for developers to cover the expenses of building new homes [3]. Consequently, developers' plans to build enough homes to meet the ongoing housing demand may fall short in the near future [1]. Additionally, the political arena, such as Ontario's Bill 17, focuses on legislative changes to speed up housing construction, but the impact on the housing market depends on implementation at the local level [4]. To alleviate the potential housing shortage and its impact on the economy, immediate actions, like lowering the GST on home construction, are proposed to stimulate development and avoid a possible surge in home prices [2].
