Chapter 2: Economic Performance and Outlook

Introduction

Ontario’s economy performed better than expected in 2023, despite economic headwinds prompted by elevated consumer price inflation and high interest rates. Ontario’s labour market performed strongly in 2023 and the unemployment rate remained low. This builds on record job growth since 2021.

However, the economic outlook has deteriorated compared to the 2023 Budget with significantly lower growth projected in 2024, and slightly lower growth in 2025 and 2026. Job growth is also projected to be lower in 2024 as a result.

High interest rates are expected to continue impacting Ontario’s economy in 2024, with real gross domestic product (GDP) growth projected to slow from an estimated 1.2 per cent in 2023 to 0.3 per cent in 2024. Real GDP growth is projected to accelerate to 1.9 per cent in 2025, and 2.2 per cent in 2026 and 2027. For the purposes of prudent fiscal planning, these projections are slightly below the average of private‐sector forecasts.

Revisions to the Outlook Since the 2023 Budget

Ontario’s real GDP grew by an estimated 1.2 per cent in 2023, stronger than the projection in the 2023 Budget, and nominal GDP growth is estimated at 4.1 per cent, higher than the 2.8 per cent 2023 Budget projection.

The outlook has been revised compared to the projections in the 2023 Budget. Key changes since the 2023 Budget include the following:

• Stronger estimated real and nominal GDP growth in 2023, accompanied by significantly stronger job creation and a lower unemployment rate;
• Slower real and nominal GDP growth between 2024 and 2026, with the most pronounced deterioration in 2024;
• Weaker net operating surplus of corporations growth over the forecast period; and
• Stronger housing starts throughout the forecast period. See the Housing Supply Progress section later in this Chapter for further details on the latest information for 2023.

Recent Economic Performance

Despite ongoing economic headwinds, Ontario continued to experience above average employment growth in 2023, adding 183,200 net new jobs, a 2.4 per cent increase. This followed record gains of 5.2 per cent in 2021 and 4.6 per cent in 2022. Job creation over the 3-year period since 2021 is the highest on record. Ontario’s unemployment rate rose modestly to 5.7 per cent in 2023 but remained low compared to its recent historic average.

Other economic indicators were largely positive for Ontario in 2023. New motor vehicle sales, exports, manufacturing sales and retail trade all posted growth in the year. The housing market moderated as higher mortgage rates contributed to home resales declining by 12.3 per cent in 2023.

Real GDP Growth

After a strong start to the year, Ontario’s real GDP growth moderated through the course of 2023, as the Bank of Canada’s high interest rates weighed on the economy. Real GDP was unchanged in the third quarter of 2023, slowing from gains of 0.6 per cent and 0.4 per cent in the first and second quarters, respectively. Interest-sensitive components such as household consumption and business investment have been particularly impacted by past interest rate increases. Despite this easing of growth in the second half of the year, Ontario real GDP is estimated to have grown 1.2 per cent in 2023.

Consumer Price Inflation

Ontario Consumer Price Index (CPI) inflation has eased significantly to 2.7 per cent (year-over-year) in January 2024 from 7.9 per cent in June 2022. The CPI moderation was largely due to lower energy prices, which declined 4.0 per cent on a year-over-year basis in January 2024, compared to a 37.0 per cent increase in June 2022. Inflation excluding food and energy also moderated to 3.2 per cent in January 2024 from 5.5 per cent in July 2022.

Economic Outlook

The Ontario Ministry of Finance regularly consults with private-sector economists while tracking their forecasts to inform the government’s planning assumptions.

Private-sector forecasters, on average, are projecting that Ontario’s real GDP will grow by 0.4 per cent in 2024, 2.0 per cent in 2025, and 2.3 per cent in 2026 and 2027. This is a deterioration in the economic forecast since the 2023 Budget. The Ontario Ministry of Finance’s real GDP projections are set slightly below the average of private-sector forecasts in each year for prudent planning purposes. Three external economic experts reviewed the Ontario Ministry of Finance’s economic planning assumptions and found them to be reasonable.¹

Private-sector forecasters, on average, are projecting that Ontario’s nominal GDP will grow by 2.8 per cent in 2024, 4.0 per cent in 2025, 4.4 per cent in 2026 and 4.2 per cent in 2027. The Ontario Ministry of Finance’s nominal GDP projections are set slightly below the average of private‑sector forecasts in each year for prudent planning purposes.

The Ontario Ministry of Finance estimates that Ontario nominal GDP increased by 4.1 per cent in 2023, largely reflecting continued elevated GDP inflation coupled with moderate growth in real GDP. Nominal GDP growth is projected to slow in 2024 and then is projected to accelerate over the outlook period.

Global Economic Environment

The global economic growth outlook for 2024 has improved slightly as growth in several countries, notably the United States, has been resilient despite significant monetary policy tightening by key central banks over the past two years to address elevated price inflation. The International Monetary Fund projects global real GDP growth of 3.1 per cent in 2024, up from the 2.9 per cent forecast in October. For 2025, global real GDP growth is forecast to be 3.2 per cent, unchanged from the October forecast.

Real GDP growth in the United States is projected to ease from 2.5 per cent growth in 2023 to 2.1 per cent in 2024 and 1.7 per cent in 2025, as domestic demand moderates and labour markets adjust to the cumulative impacts of past monetary policy tightening. Euro area real GDP growth is projected to pick up from 0.5 per cent in 2023 to 0.9 per cent in 2024 and 1.7 per cent in 2025, as household spending strengthens, and the region continues to adjust to the energy and other commodity price shocks that followed the Russian invasion of Ukraine in 2022. China’s real GDP growth is forecast to moderate from 5.2 per cent in 2023 to 4.6 per cent in 2024 and 4.1 per cent in 2025, with financial stresses originating from the property sector continuing to weigh on the economy.

Global supply chains that came under significant pressure during the COVID-19 pandemic have improved significantly over the past two years. The Global Supply Chain Pressure Index (GSCPI) produced by the Federal Reserve Bank of New York shows that supply chain pressures peaked in December 2021. As demand patterns normalized and pressures on production and transportation systems eased, the index subsequently declined. By February 2023, the supply chain pressure index declined below its historical average, reaching a low in May 2023. Global supply chain pressures have since risen but are currently close to their historical average level.

Financial Markets and Other External Factors

Following the fastest pace of policy rate increases since 1981, the Bank of Canada has maintained its policy interest rate at 5.0 per cent since July 2023. The Bank’s current policy rate stands well above the 2.0 to 3.0 per cent range that the Bank considers as its neutral policy interest rate, which is the interest rate consistent with the economy producing at its potential capacity when inflation is at two per cent. The Bank’s current monetary policy stance is helping to moderate CPI inflation but has contributed to slowing economic growth. The Bank projects inflation to remain around three per cent during the first half of 2024 before easing, returning to the two per cent target in 2025.

Most private-sector forecasters expect the Bank of Canada to begin easing policy interest rates in 2024 and continue easing into 2025. Accordingly, the Government of Canada three-month treasury bill rate is expected to moderate from 4.8 per cent in 2023 to 4.4 per cent in 2024 and reach 2.6 per cent by 2026 and 2027. The Government of Canada 10‐year bond rate increased from 2.8 per cent in 2022 to 3.3 per cent in 2023 and is expected to moderate to an average of 3.2 per cent in 2024 and 2025. It is then expected to average 3.4 per cent in 2026 and 2027.

Energy prices are expected to remain relatively stable over the projection horizon. West Texas Intermediate (WTI) crude oil prices moderated to US$78 per barrel in 2023, down from US$95 per barrel in 2022. The WTI price is expected to average US$78 between 2024 and 2027. The Canadian dollar is projected to appreciate gradually over the projection period from 74.1 cents US in 2023 to 74.6 cents US in 2024, and average of 77.6 cents US from 2025 to 2027.

Details of Ontario’s Economic Outlook

The Ontario Ministry of Finance projects real GDP to rise by 0.3 per cent in 2024, 1.9 per cent in 2025, and 2.2 per cent in 2026 and in 2027. Nominal GDP is projected to grow by 2.7 per cent in 2024 and accelerate to 3.9 per cent in 2025, 4.3 per cent in 2026 and 4.1 per cent in 2027.

Employment and Household Spending

High interest rates are projected to contribute to an easing in the labour market in early 2024 before improving later in the year. Employment is projected to rise by 0.8 per cent in 2024, slowing from a 2.4 per cent increase in 2023. The slower employment growth, along with continued robust population and labour force growth, is projected to raise the unemployment rate to 6.7 per cent in 2024. The unemployment rate over the outlook period is projected to remain below the recent historical average.

A strengthening economy is projected to boost employment growth to 1.7 per cent in 2025 and 1.4 per cent in both 2026 and 2027. As employment gains increase, the unemployment rate is expected to gradually decline to 6.2 per cent by 2027.

Slowing demand has helped ease price pressures while population increases have contributed to rising nominal household spending in 2023, which was up 6.0 per cent, after a 13.2 per cent increase in 2022. Despite these strong gains, real spending softened on a per capita basis in 2023 as higher prices and interest costs weighed on household budgets. Canadian household interest payments on debt on a real per capita basis have risen significantly and are at the highest level in over 30 years.

Nominal household spending growth is projected to moderate to 3.5 per cent in 2024 but is expected to accelerate to 4.1 per cent in 2025 as interest rates decrease and the labour market strengthens.

Consumer Price Inflation

Following a significant easing in inflationary pressures in 2023, price pressures are projected to continue to moderate in 2024 as high interest rates continue to dampen demand.

For planning purposes, the Ontario Ministry of Finance is projecting CPI inflation to slow from 3.8 per cent in 2023 to 2.6 per cent in 2024, before returning to the Bank of Canada’s inflation rate target of 2.0 per cent in 2025.

However, the future path of CPI inflation is uncertain. Elevated inflation for certain goods and services remains persistent. As well, risks to global supply chains have risen in recent months, impacting shipping costs and delivery times. Private‐sector economists have a wide range of views, with forecasts for 2024 inflation ranging from 1.8 per cent to 3.0 per cent.

Federal carbon tax policy has contributed to inflation. The Bank of Canada has estimated that eliminating the carbon tax could create a one-time drop in inflation of 0.6 percentage points in Canada.² On April 1, the federal carbon tax is scheduled to increase. According to the Bank of Canada, the planned increase of the carbon tax would raise year-over-year inflation by roughly 0.1 percentage points. ³

Housing Supply Progress

Ontario has set a goal of building at least 1.5 million homes by 2031 and has assigned the province’s 50 largest municipalities with housing targets to help meet this goal.

In 2023, the goal was to create 110,000 new homes in Ontario. By year-end, 109,011 new homes were created, or 99 per cent of the target. This included a mix of market housing starts, additional residential units and long-term care beds.

Housing Market

Ontario’s housing market continues to face challenges from elevated interest rates and insufficient supply amid record population increases. See Chapter 1, Section A: Building Ontario for details on how the provincial government is working with other levels of government and industry partners to get more homes built in Ontario.

The Bank of Canada has held its policy interest rate at 5.0 per cent since July 2023. However, the cumulative impact of its rate increases since March 2022 has elevated mortgage costs, which have weighed on Ontario’s housing market activity. The average home price declined 6.3 per cent in 2023 to $872,100, a level on par with that in 2021. Home resales were 12.3 per cent lower in 2023 following a sharp decline of 31.9 per cent in 2022, reaching the lowest volume of sales in more than two decades.

Despite the decline in average home prices, high interest rates have kept mortgage carrying costs at record levels. The average monthly mortgage carrying cost, based on the Ontario average home resale price with a 20 per cent down payment and a 25-year amortization period, was around $4,600 in the last quarter of 2023, well above the previous peak recorded in the late 1980s after adjusting for inflation. This has been a significant contributor to housing-related CPI inflation over the past year.

Projected population growth and moderating mortgage interest rates are expected to boost housing market activity over the projection period. The average home resale price in Ontario is projected to decline 0.2 per cent in 2024 before growing 3.1 per cent in 2025 and 4.0 per cent in 2026. Home resales are projected to grow 4.0 per cent in 2024, 16.0 per cent in 2025 and 1.2 per cent in 2026.

Risks to the Outlook

Consumer price inflation has continued to ease in many jurisdictions, but measures of core inflation, which adjust for more volatile components, remain elevated. The outlook for inflation remains a key source of uncertainty for the global economy as well as for Canada and Ontario. Although several major central banks, including the Bank of Canada and the U.S. Federal Reserve, have signalled that they have likely concluded their recent cycles of interest rate increases, a significant downside risk is that they may maintain higher interest rates for longer if they judge it necessary to ensure the return of inflation to the target rate. Conversely, an upside risk for the economy is that inflation normalizes more rapidly than expected, allowing for a quicker easing of monetary policy.

Economic growth in the United States has proven surprisingly resilient in the face of significant monetary policy tightening, including strong consumer demand and buoyant labour markets. Continued economic resilience in the United States represents an upside risk to the Ontario economy, notably for growth in Ontario exports. However, the economy in the United States is exposed to significant risks as the cumulative impact of past interest rate rises are expected to weigh on aggregate demand. There is also a risk of fiscal consolidation, as ongoing sizable fiscal deficits have raised federal government debt in the United States to high levels.

Geopolitical developments continue to pose a significant risk to the economic outlook. Global conflicts continue to disrupt commodity markets and pose risks to supply chains. In addition, rising trade tensions are continuing to weigh on international trade in goods and services, which could impact Ontario’s key trading relationships in North America.

Table 2.7 displays current estimates of the impact of sustained changes in key external factors on Ontario’s real GDP planning assumptions, assuming other external factors remain unchanged. The relatively wide range of estimated impacts reflects the uncertainty regarding how the economy could respond to these changes in external conditions.

Economic Outlook Scenarios

To provide more transparency about the province’s economic outlook amid the elevated degree of economic uncertainty, the Ontario Ministry of Finance has developed Faster Growth and Slower Growth scenarios that the economy could take over the next few years. These alternative scenarios should not be considered the best case or the worst case, but reasonable possible outcomes in this period of uncertainty.

By 2027, the level of real GDP in the Faster Growth scenario is 2.4 per cent higher than in the Planning Projection, while in the Slower Growth scenario, the level of real GDP is 1.6 per cent lower. The nominal GDP scenarios show a wider range of outcomes over the next several years compared to the real GDP scenarios, due largely to heightened near-term uncertainty around GDP inflation. By 2027, the level of nominal GDP in the Faster Growth scenario is 3.5 per cent higher than in the Planning Projection, while in the Slower Growth scenario, the level of nominal GDP is 2.7 per cent lower.

Transparent Reporting on the Economy

The Ontario Economic Accounts provide a comprehensive overall assessment of the performance of Ontario’s economy. Private-sector economists use this to assess the current state of the province’s economy and as a basis for updating their forecasts. The Ontario Economic Accounts help inform the government’s economic and revenue forecasts, providing a key foundation for Ontario’s fiscal plan.

The Fiscal Sustainability, Transparency and Accountability Act, 2019 states that the quarterly Ontario Economic Accounts shall be released within 45 days after the Statistics Canada release of the National Income and Expenditure Accounts.

In compliance with the legislation, the quarterly Ontario Economic Accounts will be released according to the schedule outlined in Table 2.10.

Footnotes

[1] The three experts are from the Policy and Economic Analysis Program at the University of Toronto; Quantitative Economic Decisions, Inc. (QEDinc.); and Stokes Economics Consulting, Inc.

[2] Canada, Parliament, House of Commons, Standing Committee on Finance, Minutes of Proceedings and Evidence, 44th Parliament, 1st Session, No 112 (October 30, 2023).

[3] Bank of Canada. Monetary Policy Report, (October 2023).

Chart Descriptions

Chart 2.1: Ontario’s Strong Employment Growth

The bar chart shows Ontario’s employment growth from 2000 to 2023.

Growth rates were as follows: 3.2 per cent in 2000; 1.8 per cent in 2001; 1.9 per cent in 2002; 3.0 per cent in 2003; 1.6 per cent in 2004; 1.1 per cent in 2005; 1.2 per cent in 2006; 1.2 per cent in 2007; 1.0 per cent in 2008; –2.4 per cent in 2009; 1.6 per cent in 2010; 1.7 per cent in 2011; 0.7 per cent in 2012; 1.6 per cent in 2013; 0.5 per cent in 2014; 0.7 per cent in 2015; 1.0 per cent in 2016; 2.3 per cent in 2017; 1.8 per cent in 2018; 2.5 per cent in 2019; –5.4 per cent in 2020; 5.2 per cent in 2021; 4.6 per cent in 2022; and 2.4 per cent in 2023.

There is a horizontal line at 1.4 per cent representing the average employment growth over the 2000 to 2023 period. There is a text box pointing to 2009 that says "2008–09 Global Financial Crisis" and a text box pointing to 2020 that says "COVID-19 Pandemic".

Source: Statistics Canada.

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Chart 2.2: Performance of Other Key Economic Indicators in 2023

This bar chart shows the per cent change in key Ontario economic indicators in 2023. Changes are as follows: new motor vehicle sales increased 12.4 per cent; international merchandise exports increased 11.3 per cent; manufacturing sales increased 5.3 per cent; retail trade increased 0.6 per cent; and home resales decreased 12.3 per cent.

Sources: Statistics Canada and Canadian Real Estate Association.

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Chart 2.3: Ontario’s Real GDP Growth Moderated in 2023

This bar chart illustrates the quarterly real gross domestic product growth in Ontario from the first quarter of 2021 to the third quarter of 2023. Real gross domestic product growth is as follows: 1.4 per cent in 2021Q1; −0.8 per cent in 2021Q2; 1.6 per cent in 2021Q3; 1.7 per cent in 2021Q4; 1.1 per cent in 2022Q1; 1.0 per cent in 2022Q2; 0.4 per cent in 2022Q3; –0.1 per cent in 2022Q4; 0.6 per cent in 2023Q1; 0.4 per cent in 2023Q2; and 0.0 per cent in 2023Q3.

Source: Ontario Ministry of Finance.

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Chart 2.4: Ontario’s Consumer Price Inflation Moderating

This line chart shows Ontario’s Consumer Price Index (CPI) inflation in year-over-year per cent for all items (shown as a solid blue line) and all items excluding food and energy (shown as a solid gray line) from January 1982 to January 2024.

In January 2024, Ontario CPI inflation for all items was 2.7 per cent year-over-year, while CPI inflation for all items excluding food and energy was 3.2 per cent, year-over-year.

Source: Statistics Canada.

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Chart 2.5: Ontario Nominal GDP Growth Projected to Moderate

The bar chart shows Ontario real and nominal GDP growth rates and GDP inflation from 2022 to 2027.

Ontario nominal GDP growth was 9.2 per cent in 2022, an estimated 4.1 per cent in 2023 and is projected to be 2.7 per cent in 2024, 3.9 per cent in 2025, 4.3 per cent in 2026 and 4.1 per cent in 2027.

Ontario real GDP growth was 3.9 per cent in 2022, an estimated 1.2 per cent in 2023 and is projected to be 0.3 per cent in 2024, 1.9 per cent in 2025, 2.2 per cent in 2026 and 2.2 per cent in 2027.

Ontario GDP inflation was 5.3 per cent in 2022, an estimated 2.9 per cent in 2023 and is projected to be 2.4 per cent in 2024, 2.0 per cent in 2025, 2.1 per cent in 2026 and 1.9 per cent in 2027.

Sources: Statistics Canada and Ontario Ministry of Finance.

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Chart 2.6: Global Real GDP Growth Projections

This bar chart shows estimated and forecast real GDP growth in per cent in 2023, 2024 and 2025 for the world economy, the United States, the Euro Area and China. Real GDP growth in 2023, 2024 and 2025 is projected to be 3.1 per cent, 3.1 per cent and 3.2 per cent for the world economy; 2.5 per cent, 2.1 per cent and 1.7 per cent in the United States; 0.5 per cent, 0.9 per cent and 1.7 per cent in the Euro Area; and 5.2 per cent, 4.6 per cent and 4.1 per cent in China.

Note: World real GDP growth for 2023 is an estimate, while United States, Euro Area and China real GDP growth rates in 2023 are actuals.

Sources: International Monetary Fund (January 2024) and Blue Chip Economic Indicators (February 2024).

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Chart 2.7: Global Supply Chain Pressures Have Eased

This line chart shows the Federal Reserve Bank of New York’s Global Supply Chain Pressure Index from January 2018 to January 2024, expressed as standard deviations from the historical average value.

The index averaged 0.20 between January 2018 and January 2020. The index increased from 1.20 in February 2020 to 3.21 in April 2020 before declining to 0.11 in October 2020. It then again increased to 4.34 in December 2021 before declining to –1.57 in May 2023. It then increased to –0.11 by January 2024.

Notes: Standard deviation is a measure of variability in data. The more standard deviations an observation is from the average value, the less likely an observation is to occur.

Source: Federal Reserve Bank of New York, Global Supply Chain Pressure Index (January 2024).

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Chart 2.8: Bank of Canada Raised Policy Interest Rate Significantly

This line chart shows the Bank of Canada target for the overnight rate in per cent from January 2015 to February 2024. Following the fastest pace of policy rate increases since 1981, the Bank of Canada has maintained its policy interest rate at 5.0 per cent since July 2023. This is the Bank’s fourth consecutive rate pause after raising its benchmark rate to five per cent in July 2023, starting from a low of 0.25 per cent in March 2022. The gray area shows the range of the Bank of Canada nominal neutral policy rate, which was estimated to be between 3.0 and 4.0 per cent from January 2015 to March 2016, between 2.75 and 3.75 per cent from April 2016 to March 2017, between 2.5 and 3.5 per cent from April 2017 to March 2019, between 2.25 and 3.25 per cent from April 2019 to September 2020, between 1.75 and 2.75 per cent from October 2020 to March 2022, and between 2.0 and 3.0 per cent from April 2022 to February 2024.

Source: Bank of Canada data.

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Chart 2.9: Ontario Unemployment Rate to Remain Below Historical Average

This line chart illustrates Ontario’s annual unemployment rate from 2004 to 2023, represented by the solid blue line, and the forecast for 2024 to 2027, shown by the dashed blue line. The Ontario Ministry of Finance’s planning projection is based on external sources as of January 25, 2024. Ontario’s historical average unemployment rate over 2004 to 2023 is 7.1 per cent and is represented by the dashed black line.

Over the 2004 to 2023 period, the highest unemployment rates were 9.8 per cent in 2020 and 9.2 per cent in 2009. The lowest unemployment rate was 5.6 per cent, which occurred in 2018, 2019 and 2022. The Ontario unemployment rate was 5.7 per cent in 2023. The unemployment rate is forecast to be 6.7 per cent in 2024, 6.6 per cent in 2025, 6.4 per cent in 2026 and 6.2 per cent in 2027.

Sources: Statistics Canada and Ontario Ministry of Finance.

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Chart 2.10: Canadian Households Paying More Interest

This area chart shows in 2023 dollars annual Canada household debt interest paid per capita from the first quarter of 1992 to the third quarter of 2023. The interest paid per capita is a seasonally adjusted annual rate and deflated using the Canada Consumer Price Index.

For most of the period, the real annual interest debt paid per capita was between 2023$2,500 and 2023$3,500. The highest level of real debt interest paid per capita, in 2023 dollars, occurred in the first quarter of 1992 at around $3,200, the first quarter of 2008 at around $3,500, the third quarter of 2019 at around $3,200 and the third quarter of 2023 at just over $4,000.

Sources: Statistics Canada and Ontario Ministry of Finance calculations.

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Chart 2.11: Inflation Projected to Ease

This line chart shows annual Ontario Consumer Price Index (CPI) inflation from 2017 to 2023, as well as projected Ontario CPI inflation for 2024 through 2027. The Ontario Ministry of Finance’s planning projection is based on external sources as of January 25, 2024.

Ontario CPI inflation was near 2.0 per cent between 2017 and 2019, before slowing to 0.7 per cent in 2020. Inflation increased to 6.8 per cent in 2022 before easing to 3.8 per cent in 2023.

Ontario CPI inflation is projected to be 2.6 per cent in 2024 before slowing to 2.0 per cent in 2025. Inflation is projected to stay at 2.0 per cent in 2026 and 2027. The shaded area on the chart shows the range of private-sector forecasts for Ontario CPI inflation for 2024 through 2027. Private-sector forecasts range from 1.8 per cent to 3.0 per cent in 2024. The range is narrower in 2025 and 2026, before widening in 2027.

Sources: Statistics Canada, Ontario Ministry of Finance and Ontario Ministry of Finance Survey of Forecasters.

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Chart 2.12: Making Progress on Housing Supply

The bar chart shows the target for new homes created in 2023 was 110,000 units and actual new homes created in 2023 totalled 109,011 units. Of the new homes created, 89,297 units were housing starts, 9,879 units were additional residential units and 9,835 were long-term care beds.

Note: Long-term care beds includes new and upgraded beds.

Sources: Canada Mortgage and Housing Corporation, Ontario Ministry of Municipal Affairs and Housing, and Ontario Ministry of Long-Term Care.

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Chart 2.13: Housing Affordability Impacted by Higher Mortgage Costs

The line chart shows average monthly mortgage carrying cost adjusted to 2023 dollars from 1988Q1 to 2023Q4. The real average monthly mortgage carrying cost reached a high of $3,479 in 1989Q1 before declining gradually to a low of $1,600 in 1998Q1. Since then, it has been trending upward reaching $3,186 in 2020Q1. Growth in the real average monthly mortgage carrying cost then accelerated to a record high of $4,578 as of 2023Q4.

Notes: Real average monthly mortgage carrying cost calculated using Ontario average home resale price and CPI inflation with assumptions of a 20 per cent down payment, 25-year amortization period and 5-year conventional mortgage rates.

Source: Statistics Canada, Canadian Real Estate Association and Ontario Ministry of Finance calculations.

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Chart 2.14: Housing Market Projected to Rebound

The left bar chart shows actual Ontario home resales from 2017 to 2023 and projected Ontario home resales from 2024 to 2027. Ontario home resales recorded 219,696 units in 2017, 192,456 units in 2018, 209,738 units in 2019, 227,637 units in 2020, 271,189 units in 2021, 184,612 units in 2022 and 161,890 units in 2023. Ontario home resales are projected to be 168,367 units in 2024, 195,306 units in 2025, 197,649 units in 2026 and 200,021 units in 2027.

The right bar chart shows actual Ontario average home resale price from 2017 to 2023 and projected Ontario average home resale price from 2024 to 2027. Ontario average home resale price was $586,659 in 2017, $571,898 in 2018, $608,269 in 2019, $706,572 in 2020, $872,155 in 2021, $930,489 in 2022 and $872,064 in 2023. Ontario average home resale price is projected to reach $870,320 in 2024, $897,300 in 2025, $933,197 in 2026 and $970,530 in 2027.

Sources: Canadian Real Estate Association and Ontario Ministry of Finance.

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Chart 2.15: Range of Ontario GDP Scenario Forecasts

Ontario Ministry of Finance planning projection for real GDP for 2024 to 2027, in billions of 2017 dollars. Separate lines show the levels of real GDP in the Faster Growth and the Slower Growth scenarios for 2024 to 2027. Ontario real GDP was $909 billion in 2022 and is estimated to have been $920 billion in 2023. In the Planning Projection, Ontario real GDP is projected to rise from $922 billion in 2024 to $982 billion in 2027. In the Faster Growth scenario, Ontario real GDP is projected to rise from $932 billion in 2024 to $1,005 billion in 2027. In the Slower Growth scenario, Ontario real GDP is projected to rise from $914 billion in 2024 to $966 billion in 2027.

The line chart on the right shows Ontario nominal GDP in 2022, estimated nominal GDP in 2023 and the Ontario Ministry of Finance planning projection for nominal GDP for 2024 to 2027, in billions of dollars. Separate lines show the levels of nominal GDP in the Faster Growth and the Slower Growth scenarios for 2024 to 2027. Ontario nominal GDP was $1,048 billion in 2022 and is estimated to have been $1,091 billion in 2023. In the Planning Projection, Ontario nominal GDP is projected to rise from $1,121 billion in 2024 to $1,264 billion in 2027. In the Faster Growth scenario, Ontario nominal GDP is projected to rise from $1,141 billion in 2024 to $1,309 billion in 2027. In the Slower Growth scenario, Ontario nominal GDP is projected to rise from $1,103 billion in 2024 to $1,231 billion in 2027.

Sources: Statistics Canada and Ontario Ministry of Finance.

Return to Chart 2.15