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Despite government action, the residential construction industry continues to suffer, with fewer homes and condos being built. By all accounts, that will be the case for some time to come. Reports indicate that the slide is likely to keep going. The ambitious housing supply targets set by the senior levels of government are slipping further away. Nonetheless, we need to keep driving change that will lower taxes, fees and levies on housing that make homes too expensive as well as reduce the red tape and bureaucracy constricting new housing construction.<\/p>\n<\/div>\n
It is critical that these changes be made as the walls are closing in. Nationally, CMHC reports that housing starts are still dropping, continuing a long-term slowdown, with Toronto and Vancouver reporting the largest decreases. This, at a time when we need new housing the most. In Ontario, the Financial Accountability Office recently reported that housing starts in the third quarter of the year declined by 16.9 per cent compared to the same period last year. Alarmingly, detached homes are on track for the lowest level of annual starts on record back to 1955 due to affordability challenges.<\/p>\n<\/div>\n
The target of building 1.5 million homes in Ontario by 2031 is in serious jeopardy. To reach the target, the province would need to hit record highs every quarter from now until 2031 and beat its 2021 building pace by 74 per cent. But every quarter we\u2019re falling further behind. The province has averaged 22,900 starts per quarter over the past three years, when 34,100 starts were needed. A recent study by the Smart Prosperity Institute <\/a>shows that Ontario has consistently ranked in the bottom half of provinces in terms of new home building per capita over the last six years \u2013 and is getting worse. RESCON recently released a report that indicated housing starts over the next few years will continue to weaken, making the shortage even worse. Equally concerning, employment in new residential construction has peaked and will likely fall in the years ahead, causing job losses in other industries as well. This will have a significant cooling effect on the broader economy as construction employs nearly 600,000 workers in Ontario and contributes about $57 billion, or 7.4 per cent to the province\u2019s GDP. Nationally, the industry employs 1.6 million and contributes $151 billion, or 7.4 percent to the country\u2019s GDP. The numbers don\u2019t lie and in spite of ambitious supply targets being set and various actions being taken by three levels of government to encourage increased production, we are heading in the wrong direction. The supply problem is driven by the industry\u2019s elevated costs which have been largely driven by the runaway taxation of new housing in recent years as well as the challenges of getting projects approved.<\/p>\n<\/div>\n The good news is that reality is beginning to set in. Ontario Premier Doug Ford has stated that development charges are unacceptably high and something must be done. Federally, Opposition Leader Pierre Poilievre has called for cutting sales taxes on new housing under $1 million. Housing Minister Paul Calandra has said he is very excited to speak with the federal Conservatives about the idea, saying that the province saw an \u201cexplosion of construction\u201d when Ontario removed the provincial portion of HST from new purpose-built rental housing.<\/p>\n In Ontario, taxes, fees and levies are the highest in North America. We are at a point where working Canadians can not afford new housing. This will have a chilling effect on investment and erode quality of life.<\/p>\n<\/div>\n Earlier this year, the city of Burlington showed leadership when council voted to lower its development charges. Recently, the city of Vaughan also lowered its development charges to boost home building.Unfortunately, some municipalities don\u2019t get it, though. Take Ottawa for example. Despite warnings from the feds, Ottawa took a giant step backwards as councillors voted to hike development charges by 11 per cent.<\/p>\n Removing government-imposed costs from the prices of new homes would have a significant impact on costs. In the GTA, for instance, the average municipal charge for new homes is $164,920 \u2013 about $42,000 higher than in 2022. For apartments, the current figure is $122,387 \u2013 about $32,000 higher than in 2022.<\/p>\n<\/div>\n For many years now, we\u2019ve argued that excessive taxes, fees and levies are major impediments to building new housing. However, our call to action went largely unheeded. Hopefully, more people are now listening.<\/p>\n<\/div>\n 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 me***<\/span>@****<\/span>on.com<\/span>.<\/i><\/p>\n<\/div>\n \t\t\t\t<\/div>\n