Last Updated on October 30, 2024 by CREW Editorial
With regards to the current housing supply and affordability crisis, it appears from remarks by speakers, politicians and stakeholders at RESCON’s recent housing summit that all levels of government have overcome the first hurdle. Now they must take collective action to tackle the issue.
Figures presented at the summit showed the housing market is in rough shape with the condo market taking a once-in-a-generation shellacking as projects have been put on hold. The industry is also facing massive layoffs.
Condo sales in the GTA have basically tanked and are now 81 per cent below the 10-year average. The number of unsold condos is rising, and purpose-built rental apartment starts are down 30 per cent from 2023 – and still falling. The number of cranes in the GTA are down 22 per cent this year.
Ontario’s population expanded by 200,000 over the past six months, but the province saw only 37,425 housing starts, 6,577 fewer units than the same period in 2023. That’s not a good metric.
The reason?
The residential construction industry is handcuffed by restrictive rules, cumbersome processes, and exorbitant fees – which all drive up the cost of housing.
Taxes & fees are a problem
Taxes on new housing in the GTA are the highest in North America and have combined with other factors to eliminate homebuyers – especially first-timers – from the market. In Toronto, development charges alone for single detached homes have increased nearly 2,000 per cent in 20 years.
Many at the summit noted that government-related taxes, fees and levies on new housing are out of control and approval times for projects take too long due to the labyrinth of red tape.
As of August, total municipal fees alone per unit topped out at $134,073 for a high-rise development in Toronto, $157,643 in Mississauga, $124,488 in Markham, and $114,705 in Richmond Hill.
Lengthy approval times are also adding to the price tag of housing. In the City of Toronto, the costs accumulated every month during the application process per unit can amount to $5,576.
Builders have been sounding the alarm bell for years. We have repeatedly called for action to reduce taxes, fees and levies on new housing as they add up to roughly a third of the total cost.
Last fall, the Ontario government removed the eight-per-cent provincial portion of the HST on new purpose-built rental housing in an effort to get more rental homes built across the province. This should also be done at both the provincial and federal level for market-built housing.
Outlook is bleak
The situation could get worse before it gets better, according to many who presented at the RESCON summit.
Many condo projects have been put on hold. Only a handful have started. That means there will be no new supply coming to market over the next couple of years at least.
But housing remains a pressing need. It is crucial to our economic growth and well-being. Many of our brightest and best have already left our cities to look for affordable housing elsewhere.
We must shift our focus to solutions and accelerate the changes necessary to build more housing that people can afford. We must decrease the cost of a new home and the best way to do that is remove the exorbitant taxes, fees and levies on new construction and speed up the approvals.
The province is trying to create conditions to get shovels in the ground faster and recently announced it was taking action to remove barriers and make it easier and more affordable to connect new homes to the electricity grid.
This will help, but more action is needed.
We must cut taxes
We need government to cut the excessive fees, further streamline the approvals process and then get out of the way. Development charges, in particular, have been cited by builders as an obstacle.
At the housing summit, mayors from five Ontario municipalities indicated they were open to discussing changing the system of collecting development charges, but if they were reduced or cut municipalities would require funding from other levels of government to cover the cost of infrastructure.
All levels of government must be aligned to deal with this challenge However, a survey found that most Canadians don’t feel their governments are doing enough to tackle the issue of housing.
Research showed that federally only 23 per cent of people feel the government is doing enough, while provincially that figure is 26 per cent, and municipally the figure is lower at 20 per cent.
Collaboration is the key to solving the problem. The present situation is untenable. We must dial up our efforts to support change, make new homes more affordable, and boost the supply.
Builders are eager to meet the challenge. But they need the tools to make it work. Failure is not an option.
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.
