Housing starts drop in 2024, prompting city to establish task force to speed approval processes
January 16, 2025
Mia Jensen - Ontario Business Journal
Housing starts in the region dropped 15 per cent last year from 2023, prompting Ottawa Mayor Mark Sutcliffe to tell homebuilders that the city will be establishing a task force to find ways to cut red tape on the housing approval process and shave as much as two months off application timelines.
Sutcliffe made the remarks at an event for members of the Greater Ottawa Home Builders’ Association (GOHBA) on Thursday.
“We want to build more homes and we want to build them faster,” he said in his remarks, which were later posted online. “I’d like to see the city go further to streamline processes, leverage technology and embrace bold ideas to improve and shorten the approval process. We will launch a specialized task force that will explore as many solutions as possible. We need to innovate and test new ideas. They may not all work, but some of them could make a big difference.”
Early suggestions that he noted are worth exploring include deferring development charges, introducing incentives for transit-oriented development, and looking at new models like lease-to-own, vendor take-back mortgages and issuing bonds.
Jason Burggraaf, executive director of GOHBA, told OBJ that changes to approval processes are much needed.
“Timelines are just sort of dragging,” he said. “I’m glad to hear that it’s getting the focus it deserves. It’s like the mayor said in his remarks: we can only control the things within our purview. Neither the city nor the industry can control interest rates or economic conditions. But what the city does have control over is its own processes and the ability to look at that. It really seems like that’s one of the things (Sutcliffe) wanted to focus on this year.”
Ottawa-Gatineau recorded a 15 per cent drop in housing starts in 2024 compared to the previous year, the Canada Mortgage and Housing Corp. reported Thursday.
The annual pace of housing starts dropped 23 per cent in December compared to the previous month. This follows a 29 per cent decrease from September to October, and a 16 per cent drop from October to November.
Ottawa-Gatineau reported 10,202 starts last month, compared to 13,252 the month before. The annual pace of multi-unit urban starts declined 31 per cent to 7,476 in December, compared to 10,860 in November.
Burggraaf expects things to pick up this year.
“The starts we saw over the past year are reflective of the low cycle of the housing market,” he told OBJ. “Low sales activity happened in the second half of 2022 and all of 2023 because of significantly higher interest rates and a lot more economic uncertainty, especially at the consumer level. The contrast I see is that new home sales over 2024 have been much stronger month over month.”
An increase in the sales of new homes indicates an uptick in consumer confidence, which Burggraaf said means increased demand. With more people looking to get back into the market, he said developers may get the boost they need to start building more.
“We should have much stronger construction activity in terms of housing starts in 2025 and going into 2026 because sales are now back up,” he said. “Housing is always cyclical. There’s always lower points and higher points. And it seems we’re slowly but surely shifting out of the lower activity part of the cycling and gearing things back up. I expect it to be rather robust for 2025.”
CMHC says national housing starts in 2024 up 2% from 2023
Nationally, CMHC said Thursday that the total number of housing starts in 2024 rose two per cent compared with 2023, helped by increases in Alberta, Quebec and the Atlantic provinces.
The national housing agency said housing starts totalled 245,120 last year, up from 240,267 a year earlier.
CMHC said housing starts in Canada’s six largest census metropolitan areas saw a combined drop of three per cent in 2024 as starts in Vancouver, Toronto and Ottawa moved lower. Calgary, Edmonton and Montreal saw an increase in starts last year.
CMHC has said Canada will require an additional 3.5 million housing units by 2030, on top of the 2.3 million already projected to be built, to restore affordability to levels seen in 2004.
It estimated last spring that Canada could be building up to 400,000 new housing units annually, based on current resources devoted to residential construction.
TD economist Marc Ercolao said a divide has started to emerge between Ontario and other parts of the country, despite starts “running at a lofty level nation-wide.”
“Further declines in Ontario are likely on tap for this year, which, when combined with cooler population growth, points to a pullback in Canadian starts in 2025.”
The results for the full year came as CMHC said the seasonally adjusted annual rate for housing starts fell 13 per cent in December to 231,468 units, compared with 267,140 units in November.