Without reduced fees and faster approvals, Ontario could face worsening housing shortage
At a time when more homes are desperately needed, the rising costs of land, government fees, and bureaucratic delays in Canada are pushing developers out of the market.
A recent report by the Residential Construction Council of Ontario (RESCON) expects housing starts to weaken over the coming years, potentially exacerbating the existing housing shortage across the province.
RESCON’s analysis points to a mix of factors dampening the construction of new homes across Ontario. In the Greater Toronto Area (GTA), municipal fees for single-family homes have jumped to an average of $164,920, up by $42,000 from last year. Apartment fees, too, are significantly higher, now averaging $122,387 – an increase of $32,000.
Approval delays add further financial strain, costing developers between $2,672 and $5,576 per month, depending on the municipality, which can raise costs per unit by up to $90,000.
RESCON president Richard Lyall noted the strain these rising costs are placing on homebuilders.
“The findings of this report are particularly worrisome for builders as they point to a weakening residential construction market at the very time we need to build more housing,” Lyall said.
Lyall warned that if construction slows further, it could lead to substantial job losses not only within the housing sector but also in industries connected to construction, posing a broader economic risk.
The report suggested several areas for government intervention. It stressed the need to reduce taxes, fees, and other regulatory costs that impact builders, along with streamlining approval processes to remove bureaucratic barriers.
“With a critical need for new housing, it is imperative that all levels of government take immediate action to boost construction by lowering the taxes, fees and levies and reducing the red tape and bureaucracy which slows the industry and adds to the cost of housing,” he added. “To spur the market, we need conditions that allow builders to build houses that people can afford. Otherwise, we may be in dire straits as new home construction stalls and unemployment in the industry rises.”
In its long-term outlook, the report envisions two scenarios. Both predict a continued decline in housing starts and employment through 2025, with only a gradual recovery between 2026 and 2028, meaning home availability will likely remain tight and prices high.
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“The bottom line is that all governments need to get their act together and work in unison to tackle the problems that are affecting construction of new homes,” Lyall added. “Governments have made some inroads and the recent plan floated by the federal Conservatives to remove the sales taxes on new housing sold for under $1 million is a good start.
“We hope the province follows suit, and we need to reduce the bureaucracy associated with getting new homes built. If we don't take these steps the consequences could be catastrophic for our industry and the economy.”
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