Canada’s 2025 federal budget has sparked growing concern among some GTA housing experts, who say it fails to deliver meaningful support for an industry already under strain.
A Struggling Sector
Despite the federal government’s previous commitments to accelerate homebuilding, the latest budget’s measures to address the sharp slowdown in construction and sales activity are lacking. While new home sales have plummeted across the country, the downturn is particularly evident in the GTA. This slump has rippled through every layer of the housing sector, from skilled trades and construction firms to engineers and suppliers.
This threatens tens of thousands of jobs and further delays the supply of much-needed homes. Each stalled project compounds the supply gap, leaving buyers and renters facing tighter inventories and fewer affordable options.
Additional Measures
While the budget includes a few incremental changes, such as raising the GST/HST rebate threshold for first-time homebuyers of properties valued up to $1M, these measures are expected to have little effect in Toronto, where average home prices already exceed that limit.
The government’s earlier promise to cut municipal development charges in half, a key factor in reducing construction costs, has also been replaced by a vague plan for future discussion rather than an immediate policy.
In addition to some missing specifics, the long-anticipated Multi-Unit Residential Building (MURB) tax incentive (used in Canada in the 1970s) is absent, a program that could have revived the construction of purpose-built rentals. Although the expansion of CMHC’s Apartment Construction Loan Program provides some relief, it is a loan initiative rather than a direct affordability measure.
Toronto’s Budget Concerns
The City’s budget is under severe strain from the collapse in new housing sales and starts, which has reduced key real estate-related revenues. The Municipal Land Transfer Tax, typically 5% of city revenues, has plummeted, with home sales down, while development charges, averaging $800M annually, are projected to reach only $577M in 2025. These shortfalls force the city to draw from reserves, risking cuts to transit, social housing, and emergency services.
Meanwhile, infrastructure faces mounting pressure as reduced development limits funding for critical upgrades while population growth overloads aging systems. With $18B in infrastructure deficits anticipated over the next decade, fewer projects mean less capacity for water, sewer, and transit expansion.
Supply Issues
The GTA’s persistent lack of new home construction, driven by a 58% drop in starts, 28 stalled condo projects (6K units), and approvals averaging 20 months, threatens to slash annual completions from 35K to just 5K by 2029, triggering $10B in lost investment, 41K construction job cuts, and deepening the affordability crisis.
This supply bottleneck disproportionately delivers small one-bedroom condos while blocking families and downsizers from mid-rise apartments, townhomes, triplexes, and three-bedroom units. It also locks boomers in their oversized homes.
Immigration Policy Impact
This construction slowdown threatens an exodus of skilled migrant workers, who make up a critical share of the labour force but can’t afford one-bedroom rents. Canada’s immigration policy has failed to prioritize skilled trades, as only 35 Permanent Residents were admitted via the Federal Skilled Trades Program in 2024, despite a 64K-worker shortage. When demand rebounds, a severe labour crunch could delay projects, inflate costs, and derail the 70% surge in starts that the CMHC says is needed for affordability, leaving the GTA trapped in a supply crisis with no workforce to build its way out.
What This Means
- GTA downsizers are stuck in oversized homes with few mid-rise options.
- Upsizers face a scarcity of family-sized units, long commutes, or cramped living conditions.
- First-time buyers confront high entry prices, investor competition, and looming cost spikes from labour shortages, which risk permanent exclusion from ownership.
Bolder Action Needed
With the GTA’s housing market already struggling under high costs, slow approvals, and declining investor confidence, the lack of concrete action in the 2025 budget risks deepening both the affordability crisis and the GTA’s economic slowdown. Without stronger federal leadership, the gap between housing promises and housing reality may only continue to widen.
What do the latest measures mean for you? I can assist in interpreting them for your unique situation!
Are you ready to move to the next stage? Let’s chat. Send me an email (hillary@hillarylane.ca) or text/phone (416-882-4707).
