Cracks in the Foundation: Pressure Builds for Canadian Housing Developers

The Canada Mortgage and Housing Corporation estimated that the country would need to build an additional 6 million homes by 2030 to restore housing affordability -- keeping housing among the top political issues ahead of the 2025 Canadian federal election. As the election approaches, the underlying market fundamentals are positive for housing developers; however, we expect revenue and margin pressure to continue throughout 2025. On the campaign trail, both Liberal and Conservative candidates are promising to improve housing supply through various initiatives. Notwithstanding election promises, we expect developers will continue to tread lightly, balancing squeezed profitability and difficulty in planning for projects with preparing their businesses for an eventual market rebound.

Key Highlights:
-- Industry and economic headwinds are expected to hinder housing development in 2025 and beyond.
-- Inflationary pressures as a result of U.S. tariffs might be offset by government actions to reduce the fees and taxes that contribute to home prices.
-- Reduced immigration targets should help to balance demand; however, the industry is heavily reliant on skilled immigrants.

"Revenue and margins will continue to be pressured for much of 2025, with the potential for increased activity in 2026 and 2027, as pent-up demand is released and, hopefully, improvements to the current supply constraints are addressed," said Margaret Rabba, Vice President, Diversified Industries.