New home sales in the Greater Toronto Area are on track for their worst year since records began in 1981 – and the pain will not be confined to developers and buyers. It is also setting up a more complex, riskier landscape for property, construction and financial lines insurers.
The Building Industry and Land Development Association (BILD) reports that only 165 condo apartments changed hands across the GTA in November, about 40% fewer than a year earlier, while total new home sales fell to 510, a 35% drop. After 22 straight months of declines, BILD says 2025 is likely to go down as the weakest year for new home sales since it began tracking the market in the early 1980s. November’s volume was roughly 83% below the 10‑year average, according to Altus Group.
Affordability remains the main obstacle, with Altus noting there is “limited flexibility to alter costs,” leaving many buyers sidelined despite population and demand growth. BILD is already warning of “precursors for a looming supply crunch,” pointing to fewer units under construction and pre‑construction, and calling for tax and fee relief – including an expanded new‑home HST exemption and lower municipal development charges – to bring per‑unit costs down.
For insurers and brokers, that combination of vanishing new projects, rising costs and future supply pressure intersects with several trends already flagged to Insurance Business Canada by industry leaders.
Earlier this year, Special Risk Insurance Managers CUO Jessica Fryer told Insurance Business that contractor risks “have never been more complex,” with coverage models struggling to keep up as technology, post‑COVID disruption and “American‑style litigiousness” reshape construction exposures. Rising labour costs and a shortage of skilled trades are forcing contractors to pay more and subcontract more, adding layers of risk into already tight project budgets, she noted.
Contractors working under fixed‑price contracts are particularly exposed when material and labour costs spike mid‑project, leaving them to absorb cost overruns and potential financial strain.
The GTA’s record‑low new home sales magnify these pressures. With fewer new developments moving from pre‑sales to shovels in the ground, many small and mid‑sized builders and trades face thinner pipelines and more competition for work.
On the infrastructure side, iKoniK Insurance operations director Anita Stewart previously told Insurance Business that Ontario’s wave of concurrent high‑rise and mixed‑use projects was already straining capacity and coordination, with underwriters demanding more documentation on hot work and water damage mitigation before quoting builders’ risk. A prolonged slowdown in new residential projects may push more contractors and subs toward infrastructure work, potentially amplifying the coordination and capacity challenges Stewart highlighted.
The new‑home slump also sits against a deteriorating backdrop for corporate solvency, particularly in construction and real estate. Allianz Commercial’s recent D&O report flagged that global business insolvencies are expected to increase by 6% in 2025 and 5% in 2026, marking five consecutive years of rising failures. The analysis highlights concentrations in automotive, construction, retail and consumer goods, and notes that higher borrowing costs and inflation are weighing heavily on real estate and construction balance sheets.
Historically, such stress translates into more D&O claims as lenders, investors and other stakeholders seek redress for alleged mismanagement or fiduciary breaches when companies fail. For Canadian carriers, a record sales trough in the country’s largest housing market, layered on top of higher rates and escalating input costs, reinforces the need to scrutinize developer and contractor governance, leverage and project pipelines in both D&O and surety books.
Ottawa’s newly announced softwood lumber task force is another piece of the puzzle. Natural Resources Minister Tim Hodgson has tasked the group with improving productivity, opening markets and expanding the use of modern construction methods, while also committing funding to accelerate adoption of “innovative Canadian wood products” in building. He has explicitly linked the effort to “better address insurance challenges” and advance building‑code changes for low‑carbon materials.
If, as BILD fears, today’s collapse in GTA new home sales produces a deeper supply crunch, policymakers may lean harder into measures like mass timber and other wood‑based systems to speed delivery and reduce embodied carbon. That could eventually reshape Canadian property and construction risk profiles – from fire and water performance to code compliance and warranty exposures – just as carriers are recalibrating to a thinner pipeline of conventional concrete and steel projects.
For now, the GTA’s record‑low new home sales remain an early‑warning signal for construction, property, surety and D&O markets – pointing to fewer new risks today, but a more concentrated, cost‑pressured and litigious risk environment in the years ahead.
