Rental developers put projects on hold as costs rise, CMHC survey finds
New rental supply is helping cool rents in parts of Canada, but rising development costs are making the next round of projects harder to build, according to a survey commissioned by Canada Mortgage and Housing Corporation.
Some 72% of respondents said they had paused or cancelled projects in their pipelines in response to rising costs over the past two to three years. Others reported increasing rents (54%), extending project timelines (44%) or reducing unit sizes (44%) to maintain project viability.
“Developers continue to view demand fundamentals favourably but are increasingly constrained by project economics,” the report says.
The survey, conducted by professional services firm EY, formerly known as Ernst & Young, points to pressures affecting both the delivery of new rental homes and the size and rents of those that proceed.
In an accompanying Housing Observer release, CMHC said new purpose-built rental supply is helping lift vacancy rates and slow rent growth in parts of Canada. However, new units remain concentrated at higher price points, and affordability remains a challenge.
Approvals and fees top development barriers
Government regulations, fees and approval delays ranked as the most significant development challenge nationally and across every region reported in the survey. Adverse market conditions ranked second nationally, followed by construction material costs and availability, and high interest rates.
Respondents ranked faster, more predictable approvals as the policy change most likely to help advance projects, reduce risk or improve viability. Lower or deferred development charges ranked second nationally and first among respondents operating in the Greater Toronto Area.
Meanwhile, 78% said they had successfully obtained funding for a new rental development project in the past year, up from 75% in 2025. The share that had been unsuccessful fell to 10% from 12%, while 12% had not sought financing.
CMHC-insured loans were the most commonly used external funding source, cited by 85% of respondents.
Costs constrain larger rental units
For rental homes with three or more bedrooms, 72% of respondents identified development costs that achievable rents could not offset as a barrier to construction. Another 60% cited insufficient market demand at achievable rent levels.
The survey collected 110 responses from rental housing developers, owners, investors and housing providers between May 28 and July 13, 2026.
The report cautions that the findings are directional indicators of industry sentiment, rather than a statistically representative sample of Canada’s rental housing sector.
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Last modified: September 29, 2026
