Ontario Cuts Housing Forecast Despite New Development Incentives

News| October 30, 2026| Joel Bowey

Ontario Finance Minister Peter Bethlenfalvy told the legislature Thursday that the province’s response to economic uncertainty is to “build, and to build together.”

But the Fall Economic Statement he delivered forecasts considerably less building than the government expected just six months ago.

Ontario now projects 65,100 housing starts in 2027, down from 70,300 in its spring budget. Forecasts for 2028 and 2029 were also cut by more than 5,000 homes annually, despite billions in incentives.

To that end, the government is offering further help.

Student housing: Ontario wants to encourage private developers to build student residences on university-owned land. Qualifying projects would be exempt from education property taxes and receive discounted municipal property taxes, making them less expensive to operate.

Affordable housing: Ontario wants to protect existing property tax breaks for affordable housing providers after recent court rulings raised questions about eligibility. It proposes temporarily pausing the effects of those rulings while working with municipalities on changes to the law.

The measures build on an $8.8-billion federal-provincial infrastructure partnership prioritizing municipalities that cut development charges by at least 30%.

The Challenge Of Getting Projects Built

Howard Paskowitz, senior vice-president of development and public affairs at Starlight Investments, said co-operation among governments has improved, helping rental projects move forward.

“It’s like three people in a canoe, and if one’s paddling in a different direction, or deciding they’re gonna drill a hole where they’re sitting, we’re all in trouble,” he told Connect.

Starlight has more than 10,000 rental units in its Canadian development pipeline, with several thousand additional units on hold because the economics don’t work.

Paskowitz said the infrastructure funding addresses a basic problem: municipalities need water, sewer and other services before new homes can be built.

“If you can’t flush your toilet, I can’t build you a home,” he said.

He praised Mississauga for eliminating development charges on certain two- and three-bedroom rental units, saying the fees can make projects prohibitively expensive.

“When we have to pay an additional, what could be $100,000 or $120,000 to build a new home? That’s a pure expense. And on the rental side of things, we can’t just pass those on to the market.”

The FES also reiterated Ontario’s existing HST rebate for purpose-built rental housing, available to qualifying projects that begin construction before 2031 and are substantially completed before 2036.

Paskowitz welcomed the relief but said developers need greater certainty when planning projects that can take five to seven years.

“If I start on day one a seven-year project, and I have no certainty what happens beyond year five, I can’t assume that HST waiver,” he said.

Student Housing Catches Starlight’s Interest

The student housing proposal has also caught Starlight’s attention. The company does not currently specialize in the sector, but Paskowitz sees an opportunity to apply its rental development experience.

“We think it would be wonderful to partner with universities and colleges and say, hey, you guys need housing. We know how to do it,” he said.