Governments must do something to lower housing costs to make homeownership possible

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For so many Ontarians, particularly those in the Greater Toronto Area (GTA), it may seem homeownership will forever remain out of reach. The benchmark price for new single-family homes in the region in September was around $1.5 million while the benchmark price for condominiums was just over $1 million. Although a 15 to 20 per cent decrease from what prices reached in 2022, it is no wonder that purchasing a home can seem impossible. There are a number of variable factors why this is the case. 

It is likely not common knowledge that government fees and taxes account for 25 per cent of the cost of the average GTA home. Of this 25 per cent, a large part is attributable to the HST. When it was introduced, the federal government offered rebates to offset the tax burden, tailored to 1991 housing prices. However, despite a 270 per cent increase in home prices from 1990 to 2023, the federal government has not changed rebate thresholds. This means that effectively, new homebuyers in the GTA are not eligible for a federal government rebate while Ottawa collects an additional $42,000 in HST revenue per single-family home.  

Based on sales in Ontario alone, the federal coffers have benefited by as much as $4 billion, the lion’s share in the last decade. Adjusting the HST threshold to reflect today’s home prices would save new homebuyers tens of thousands of dollars. The federal conservatives, if elected, have promised to do just this. Their pledge marks a welcome policy position that will benefit the average Canadian. 

Meanwhile, delays in municipal approvals in the GTA hinder housing supply growth, limit choice, and drive up the cost for homebuyers. The Ontario Planning Act requires municipalities to render a decision on planning approvals within specific timelines. Yet, there isn’t a municipality in the GTA that meets these timeframes or even comes close. The implication is not only limited choice, but also added cost.   

BILD’s 2024 Municipal Benchmarking Study revealed that the average approval in the GTA for a single application takes 20 months — five times longer than the legal requirement — and can stretch up to 34 months. Typically, new housing requires multiple types of approvals, which further compounds delays. Because of delays, builders face increasing financing, administrative, and material costs that impact housing cost. Each month adds between $2,673 to $5,576 in added costs per unit, per month, varying by municipality and product type. When it comes to housing approvals, time literally is money and average approval delays add between $43,000 and $90,000 to the cost of an average home.  

While many new housing-related costs, such as materials and labour, are based on market conditions, lowering housing taxes is within the control of governments and is one of the fastest and easiest solutions to decreasing housing cost. As previously mentioned government fees and taxes comprise 25 per cent of a new home’s cost in the GTA, with municipal fees accounting for more than half, some of the highest levels in North America. Even during a housing crisis, these municipally applied costs have continued to increase, rising by an average of $32,000 for a typical high-rise apartment and $42,000 for a typical single-family home, since 2022.   

As residents, we must encourage government of all levels to do something to lower housing costs within their control to influence. We must tell the federal government to uphold its commitment to adjust the HST new housing rebate program to reflect the market conditions of today not 1991; we must tell our municipal government to make approvals quicker; and tell our provincial government to work with municipalities to control the costs they add to new homes. Add you voice to this discussion and visit www.bildgta.ca/dosomething/ to learn more.  

Dave Wilkes is President and CEO of the Building Industry and Land Development Association (BILD), the voice of the home building, land development and professional renovation industry in the GTA. For the latest industry news and new home data, visit www.bildgta.ca.