When it comes to housing, there’s no time to waste
By Richard Lyall
Construction ResidentialGovernments must bring housing costs and speed up approval and permitting processes, says RESCON.
Famous French general Napoleon Bonaparte once said, “Take time to deliberate, but when the time for action has arrived, stop thinking and go in.”
Now that the dust has settled on the federal election campaign, it is time for our political brain trust to lay their cards on the table and fully tackle the housing supply and affordability crisis.
Or, as Prime Minister Mark Carney promised in his victory speech after the vote count, “Build, baby, build.”
Now that the votes have been tallied, it is critical that we move sooner rather than later as housing starts in many provinces are falling faster than a category-five hurricane barometer.
The residential construction industry is ready and willing and able to build more homes. But taxes, levies and fees account for more than a third of the cost of a new home, pushing them beyond the reach of many. We need governments at all levels to do their part and reduce the burden.
Governments must bring costs down by cutting red tape and the tax burden, unlocking land, slashing unfair costs on new housing like application fees and development charges, and speeding up the development approvals and permitting systems so that the new homes can be built faster.
Developers and builders spend too much time waiting for approvals which only add to the cost of a home.
To have a strong and sustainable country, it is imperative to have a healthy and vibrant residential construction industry. Nationally, the residential construction industry in Canada employs close to 600,000 workers and contributes roughly $55 billion to the gross domestic product.
Lack of housing, though, is hampering the growth of our economy.
The ratio of housing costs to incomes has moved from a historical average of 3:1 to the current 9:1. Working families can no longer afford to buy a home in the communities where they work.
In the City of Toronto, where the average home price is $1,074,000, an individual or family would need an income of $217,000 to buy a home, according to the Canadian Real Estate Association.
A poll conducted last year indicated that 45 per cent of Canadians don’t believe they’ll ever be able to afford a home, regardless of interest rate cuts. Data like this shows the urgency of the situation.
Over the past two decades, home prices have doubled across Ontario, yet real wages have only increased by 16 per cent.
The situation has led to a brain drain of young adults ages 25 to 44 heading to the Prairies, namely Alberta, according to the latest interprovincial migration figures. Provinces like Ontario, in particular, are losing talent.
The inability to find appropriate housing is cited as a key reason young adults are picking up stakes.
The economic ramifications are a serious problem for the other provinces, as these young adults are at peak productivity. They buy homes and cars, raise families, open businesses and invest and contribute to the economy. Fewer workers mean reduced economic development.
According to latest statistics, 8,094 young people left Ontario in 2024 while Alberta gained 18,413. Ontario, which used to lead net gains for workers, has held the title of biggest loser for four consecutive years. For Alberta, it marked the third consecutive year of accelerating growth.
To get more shovels in the ground, governments must act now. Taxes, fees and levies on new homes and condos are out of control and the approvals process often moves at a glacial pace.
A report done last year by the Canadian Centre for Economic Analysis revealed that the tax and fee burden in Ontario averages almost 36 per cent of the purchase price of a new home, up from 31 per cent three years earlier. Hikes in development charges accounted for a big chunk of that increase.
The approvals process, meanwhile, is sloth-like in many instances. Projects in Toronto are supposed to be cleared in 90 days, but the application approval timeline is taking an average of 25 months.
On the campaign trail, the prime minister proposed a range of measures to double the rate of housing construction to 500,000 homes a year. Among the measures, he pledged to remove the GST for newly built homes up to a price of $1 million, if the purchaser is a first-time buyer. We believe it should be extended to purchasers of all new homes. He also promised to reintroduce the Multiple Unit Rental Building program aimed at creating more rental housing.
The measures are a step forward, but they need to be part of a much larger scheme. The rhetoric from the campaign trail must be turned into real action. Piecemeal changes won’t cut it. Government reforms must be aligned and put into effect right away. There is simply no time to waste.
Richard Lyall (Photo courtesy of RESCON)
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.
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