Housing starts in London region forecast to fall in 2025

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The number of housing starts in the London region is expected to drop in 2025 as fewer apartment towers will get built next year, the head of the region’s home builders association said Monday.  

“The big change that happened this year was we had a huge number of purpose-built rental apartment starts, and that’s just not something that will happen every year,” said Jared Zaifman, chief executive of the London Home Builders’ Association.  

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“So, next year, that number is not going to be nearly as high which, more than anything, will lead to a slower year as far as the number of (housing) starts.  

Zaifman’s comments came the same day Canada Mortgage and Housing Corp. (CMHC) reported its housing starts figures for November, which showed London’s pace of construction growing last month by nine per cent – in line with the national average.  

In total, the London area, including St. Thomas, Strathroy and portions of Elgin and Middlesex counties, had 3,709 housing starts as of November, a 75 per cent improvement over 2023, the national housing agency reported.   

Of all those units, only 514, or 14 per cent, were single-family homes, representing one of the slowest years for home construction in the region for this type of property.

“It’s not to say that 2025 is going to be a bad year,” Zaifman said. “It’s probably going to be an OK year, but likely we’re going to see more construction on the single-family side and townhouse side of things . . . just because a lot of those buildings are now getting built out.”  

The potential drop in housing starts comes as London continues to grapple with a housing affordability crisis that has seen rents and the price of homes rise steadily during the past few years.  

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It also means it would be even harder for the city to meet its provincial target for housing starts next year, a figure the city is unlikely to reach even in 2024, with city staff projections putting London shy of its goal of 3,917 units this year.  

Zaifman described the targets as “aggressive,” but a figure “everyone’s trying to meet.” 

“There’s certainly a demand for that number of homes,” he said. “The challenge is that, as business owners, people aren’t willing to stake out and have millions of dollars on the line when they know . . . that people just aren’t quite ready to pull the trigger on buying a new home.  

“It’s a bit of a difficult balance there.”  

Zaifman said he was encouraged by the latest signs coming from the resale side of the market, which has seen the number of homes being sold trending upward since the fall as the Bank of Canada continues to drop interest rates. Just last week, the central bank cut its key lending rate again by half a percentage point to 3.25 per cent.  

Describing the uptick in resale activity as “a good indicator for the new home market,” Zaifman said there may still be some lagging effect before it translates into stronger demand for new properties.  

“The expectation is that there still may be some people holding out until interest rates are stopped being cut before they start getting back out” into the market, he said. “So, I think we’ll start to see things pick up in the spring and summer next year . . . and it’s going to be the start, I think, of that momentum leading into a much bigger 2026.”  

jjuha@postmedia.com

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