The Big Picture
The newly released Federal Budget 2025 doubles down on housing. The focus is clear: increase supply, bring down building costs, and improve affordability for Canadians — especially first-time buyers.
For Toronto, where housing demand consistently outpaces supply, these measures matter. The next 12-24 months will show whether the government’s plans can meaningfully shift the balance in Canada’s most competitive market.
A Bigger Push for Housing Supply
- The government has committed roughly $13 billion over five years toward housing initiatives, including a new Build Canada Homes program and increased financing tools for developers.
- It plans to expand the Canada Mortgage Bond Corporation’s annual limit from $60 billion to $80 billion (beginning in 2026) to support financing for purpose-built rentals and multi-unit housing.
What this means for Toronto:
- For sellers: As more housing comes online, long-term price growth could moderate — especially in high-density condo and townhome segments.
- For buyers: Greater housing supply means more options and potentially less competition.
- Timing: Most new construction effects will materialize in 2026 and beyond, so short-term market pressure will remain.
Affordability & First-Time Buyer Supports
- The budget continues efforts to help first-time buyers, including maintaining the GST removal on new homes within certain price thresholds.
- It introduces funding to make home-building faster and cheaper through new productivity incentives and prefabrication support.
What this means for Toronto:
- For buyers: If you’re looking at new construction, the GST break could make ownership slightly more accessible.
- For developers: Lower building costs may translate into more project launches, which in turn increase housing choice.
- For sellers: More new inventory could introduce competition, especially in neighbourhoods where buyers might pivot to new builds.
Reducing Development Barriers
- The budget highlights collaboration with municipalities to streamline approvals and reduce development charges — major issues in Toronto’s planning process.
- It also hints at incentives for converting underused land and commercial buildings into residential housing.
What this means for Toronto:
- For the market: If the City of Toronto successfully implements faster approvals, the pace of new builds could accelerate.
- For buyers and renters: More multi-unit projects could stabilize rent growth and add mid-range housing options.
- For sellers: As approvals improve, inventory growth could gradually moderate price escalation in certain product types.
The Outlook for Toronto’s 2026 Market & Beyond
Here’s how these federal measures are likely to play out across the next couple of years:
- Affordability: Still tight, but trending in the right direction. Supply is increasing, and cost-reduction measures may help moderate price pressure.
- New construction: Expect to see more launches and purpose-built rentals; the big impact starts showing in 2026.
- Resale market: Will likely stay active through 2025 but could face more competition as new inventory arrives.
- Buyers: Begin preparing now — mortgage pre-approvals, understanding incentives, and watching early-stage project launches will put you ahead.
- Sellers: Strategic pricing and presentation will matter more as buyer choice expands.
Key Takeaways for Toronto Buyers & Sellers
- The direction is right: Canada is prioritizing housing supply and affordability — and Toronto will feel it first.
- Change takes time: Construction cycles and approvals mean the biggest benefits are 1–2 years out.
- Buyers: Get ready now so you can act when the right opportunity appears.
- Sellers: Leverage today’s market while competition remains moderate, and highlight what sets your property apart.
- Investors: Purpose-built rentals and multi-unit projects may become more appealing as financing improves.
What We’re Watching at Toronto Realty Boutique
- Growth in GTA housing starts and whether federal funding accelerates timelines.
- How first-time buyers support the influence on demand for condos and townhomes under $1 million.
- Development charge and approval reforms within the Toronto City Council.
- Shifts in rental-market pressure as new purpose-built inventory arrives.
- Resale pricing trends in high-density neighbourhoods once more inventory hits the market.
What to Watch — For Local Buyers & Sellers
| What to Watch | Why It Matters |
|---|---|
| Upcoming new-build and pre-construction launches | More inventory = better buyer choice, potential resale competition |
| Federal & local affordability incentives | Could lower entry costs for first-time buyers and increase demand in sub-$1 M range |
| Speed of Toronto’s development approvals | Budget programs help, but borrowing costs still shape demand |
| Shifts in rental supply | More purpose-built rentals could cool rent increases and adjust investor behaviour |
| 12-24 month window | Expect gradual, not immediate, effects — supply takes time |
| Interest-rate trends | Budget programs help, but borrowing costs still shape demand |
The Final Word
Budget 2025 brings welcome momentum to Canada’s housing sector. While the benefits won’t be instant, it’s clear Ottawa is focusing on boosting supply and easing affordability — both crucial for Toronto’s long-term stability.
If you’re thinking of buying or selling in the next 12–24 months and want to understand how these changes could impact your plans, contact us at Toronto Realty Boutique. We’ll help you map out how the Budget’s housing measures fit your goals, timeline, and neighbourhood.
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