TD Sees Housing Gap in Canada Ending in 2027 Thanks to Very Weak Population Growth

10:28 AM EST, 01/29/2026 (MT Newswires) -- Canadian housing starts are trending at about 260,000 annualized units, close to post-war highs, said TD.

However, in per capita terms, recent homebuilding activity is cast in a more moderate light, while the housing supply gap remains large at an estimated 400,000 units, wrote the bank in a note to clients.

Healthy homebuilding levels have been mainly driven by purpose-built rental units, supported by strong demand, government incentives, and financing programs. Meanwhile, ground-oriented ownership housing construction has lagged.

Housing starts are at or above long-term averages in every region but Ontario, supported by past robust population growth and relatively tight supply, pointed out TD. Starts have been particularly elevated, relative to long-run norms, in Alberta and the Atlantic region. Quebec's market has been propped up by the rental market, while condo construction has been surprisingly resilient in British Columbia.

Ontario, particularly the Greater Toronto Area (GTA), has exhibited the weakest homebuilding activity with condo starts at very low levels, impacted by falling prices, investor pullback, and high construction costs.

Canadian population growth has sharply moderated since 2024, and this is starting to weigh on fundamentally-driven housing demand while weakening rents, stated the bank.

Moving forward, housing starts are expected to decline in most regions due to sharply slowing population growth, rising vacancy rates, climbing unsold inventories and weak pre-construction sales activity in the GTA market. Federal initiatives like Build Canada Homes could provide support, although the program comes against the context of a broader slowdown in federal housing spending.

Even with the pace of housing starts likely to cool, tremendously weak population growth should ensure that the gap between demographically-driven demand for new homes and new housing completions closes in 2027, according to TD.

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