Canada’s push to build more homes is colliding with a less visible but increasingly urgent problem: many municipalities’ water and wastewater systems cannot keep pace with the growth governments are demanding. Across the country, developments are being delayed, phased back or halted outright even as federal and provincial officials press cities to speed up approvals.
More than 11 per cent of Canada’s water and wastewater-related infrastructure was rated in poor or very poor condition in 2022, representing an estimated $107 billion in replacement value, according to the 2025 National Infrastructure Assessment. Tim Tierney, president of the Federation of Canadian Municipalities, which represents more than 2,200 municipalities, said the issue dominates conversations with his membership. “Top. Top. Top,” he said, describing it as the leading obstacle to housing delivery. “It’s infrastructure, infrastructure, infrastructure.”
Where Capacity Is Running Out
The strain is playing out differently from city to city. In Winnipeg, the North End Sewage Treatment Plant is undergoing a multibillion-dollar upgrade, but the existing system has only about four years of additional capacity left, enough to serve roughly 40,000 more people — a figure that new industrial projects could further erode. Lanny McInnes, chief executive of the Manitoba Home Builders’ Association, said the timing is the core problem: while parts of the upgrade are coming online, the work needed to expand wastewater capacity isn’t expected to finish until 2032. “We’re flashing the signal that we’re getting very, very close to reaching that point,” he said, warning that if capacity runs out, “we will not be able to build any new housing.” McInnes said development has already been effectively restricted in municipalities surrounding Winnipeg, such as East St. Paul, where some builders have completed one phase but cannot proceed to the next.
Similar bottlenecks are showing up elsewhere. Tierney pointed to Toronto’s Black Creek trunk sewer, tied to roughly 63,000 planned homes, as a project facing infrastructure-related delays. In Ontario’s Waterloo Region, developers now have to compete for limited wastewater capacity before projects can advance. North of Calgary, the city of Airdrie is already using about 97 per cent of the water and wastewater capacity allocated to it for 2026, prompting officials to draft a priority system that would place schools, health care and emergency services first, followed by industrial, commercial and major-employer projects — with housing ranked third. A $114-million wastewater pipeline expansion connecting Airdrie to Calgary’s treatment system is underway and, according to the province, could support up to 45,000 new homes once complete.
Amie Blanchette, chief executive of BILD Calgary Region, said she isn’t aware of development currently on hold in Calgary itself purely because of water and wastewater limits, but argued the issue has to be assessed on a regional basis. “This isn’t just about the City of Calgary,” she said. “This is about the city, its surrounding municipalities, understanding where growth is and how to accommodate it.”
The Cost of Catching Up
Robert Haller, executive director of the Canadian Water and Wastewater Association, said the housing push is landing at a difficult moment for municipal systems already struggling to maintain infrastructure built for existing populations. “We’re starting behind, regardless of new housing. Yet we’re throwing that on top of an existing system that’s failing,” he said. “We need to make sure we have a solid existing system before we can add too much onto it.”
The financial scale of the challenge is significant. Supporting each new home requires an average of about $107,000 in municipally owned capital assets, including roughly $39,000 specifically for potable water and wastewater infrastructure, according to a 2023 Federation of Canadian Municipalities estimate — though actual costs vary widely by location and development type. Municipalities have traditionally leaned on development charges to help cover the cost of new sewers and water systems tied to growth, a funding model now under pressure as governments push simultaneously for faster approvals and lower fees.
Tierney said many municipalities that streamlined their approval processes in response to federal and provincial pressure have simply run into a different kind of wall. “We’ve sped up our processes,” he said. “But now we can’t get the infrastructure.”
Private Capital Still Betting on Growth
Even as municipal infrastructure limits constrain some projects, private developers continue to commit capital to new Canadian residential construction. Suntex Enterprises, a U.S.-based real estate development and construction company, announced a letter of intent in early September expanding a Canadian development partnership first unveiled in July. The agreement centres on two Alberta projects — Royal Links, a proposed 134-acre master-planned community in Leduc with 979 planned residential lots, and Meridian — together representing $575 million in projected project revenue. Royal Links alone is expected to generate $250 million in revenue, with land development slated to begin in the fourth quarter of 2026, while Meridian is projected at $325 million. Combined with additional opportunities in Oklahoma, Missouri and Texas, Suntex said its identified North American development pipeline now exceeds $1 billion over the next three to five years, with the company also negotiating the acquisition of an established Canadian development firm to build out its local operating capacity.
The contrast underscores a split reality in Canadian real estate development: capital and corporate ambition for new housing and mixed-use projects remain active, even as the physical systems needed to service that growth — water lines, treatment plants and sewer networks — struggle to keep up in numerous municipalities across the country.
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