Last Updated on July 19, 2024 by CREW Editorial
When looking at the housing supply and affordability crisis that is presently plaguing Canada, an idiom coined by popular cartoon handyman Bob the Builder quickly comes to mind.
“Can we fix it? Yes, we can!” was his signature, go-to phrase.
I firmly believe the housing situation can be fixed, but it will require a synchronized, all-out effort by the three levels of government.
There have been some positive moves of late by various governments but not nearly enough to move the needle. Each level of government – no matter their political stripe – must drop the partisanship and focus on collaborative measures aimed at boosting new housing for everyone.
They must all be rowing in the same direction, so to speak, if we are to turn the ship around.
A positive is that there now appears to be consensus that housing is an issue that needs to be fixed. However, judging by the latest statistics, the efforts to date have obviously not been enough.
Construction of homes has slowed
New home construction is starting to grind to a halt, beginning with the faster-to-build low-rise sector. It is simply too costly for developers and builders to construct homes that people can afford.
Between January and May, there was a 39-per-cent decrease in new homes sale, compared to the same period last year, according to Canada Mortgage and Housing Corporation. The agency figures we will need to build an additional 5.8 million homes by 2030 to bring the price of housing back to affordable levels, but indications so far are that we will be nowhere near that figure.
Across Canada, new home construction is expected to be 50,000 less this year than in 2023 – at a time when we are supposed to be ramping up production.
In Toronto, for example, new home sales have plummeted. A recent report indicated there were 936 new home sales across the Toronto region in May, down about 71 per cent from last year.
With the price of a new condo at just over $1 million, and new single-family homes at roughly $1.6 million, potential would-be buyers are being frozen out of the market. For a condo, a household would need $200,000 to make a downpayment and would have to pay $5,000 per month or more.
As a result, many people are forced to leave cities like Toronto and look for housing elsewhere. In the past two years, 220,000 Canadians have abandoned Ontario’s capital than have arrived.
Bold and concerted action is needed
Which brings me back to my point.
To get shovels back in the ground, we need bold and concerted action from all levels of government. They have to set the table for developers and builders to succeed.
It is the private sector that builds the bulk of housing in Canada. We can’t rely on governments to do that, so there must be a large-scale effort to encourage construction of housing.
The changes that have been made have only eliminated hurdles that should never have been there in the first place. So, it is critical that more steps be taken.
Presently, various international data points show that our housing supply crisis is one of the worst in the developed world. Our zoning and approvals processes are slow, antiquated and cumbersome and there remains too much red tape which only stands in the way of new housing.
We must reduce the bureaucracy, obstacles and reforms, remove the pointless barriers to new housing, and modernize, digitize and streamline the development approvals process to speed up applications.
Taxes, fees, levies and development charges on new housing also need to be cut by at least two-thirds. The add-ons have exploded exponentially and now account for more than 31 per cent of the cost of a new home.
The Greater Toronto Area (GTA) has the highest development charges and taxes on new housing in North America. Development charges, which are akin to a hidden tax on new home ownership, have gone up 42 per cent in less than a year and are pretty well killing the market.
And don’t get me started on the need for infrastructure to support housing growth. Municipalities use revenue from development charges to pay for some infrastructure, but the system needs to be changed. Higher levels of government must provide ongoing funding for the work.
Presently, there is no clear, co-ordinated or harmonized plan between all three levels of government to address the problem.
This has to change.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.
