RESCON: At last, some glimmers of hope

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Long-awaited moves to spur home building are better late than never

Ontario’s residential construction industry hasn’t had much to cheer about these days. With housing starts falling faster than green grass through a goose, it’s been a grim time for the sector.

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However, in the last month or so, there have been glimmers of hope as governments have finally made some long-awaited and much-anticipated moves that could help spur a recovery.

Better late than never, I say.

Righting the ship won’t be easy and more course corrections will undoubtedly be needed, but the proposed fixes could be just the tonic that’s needed.

If governments follow through on their pledges, we will see a reduction in red tape, a dip in the sales taxes, levies and development charges on new housing, and a swifter approvals process.

The result?

New housing will get built faster and costs will come down, which should help those seeking to buy a home.

For Canada to become a G7 leader in production of new housing we need conditions that will spur construction. Plain and simple.

The federal and provincial governments have introduced measures that aim to pare down the excessive tax burden that developers and buyers are saddled with. Critically, the changes will also cut red tape, streamline approvals and tackle other issues that add to the cost of a new home.

Importantly, the feds have committed to a rebate on the GST on homes at or under $1 million for first-time homebuyers, as well as pledging to reduce it on homes between $1 and $1.5 million. Earlier, the government eliminated the GST on the construction of new rental apartments and announced they would be cutting DCs in half on multi-unit residential projects.

We would like the Ontario government to follow the federal lead on sales taxes and are pleased the premier has indicated he is on board with doing that. Such a move would have a major impact. If the feds and province both waived the sales taxes on a $1-million home, it would amount to savings of $50,000 in federal and $80,000 in provincial sales taxes for a total of $130,000.

If you are a first-time home buyer, you will be eligible for the federal GST rebate if you buy a new home from a builder, you build or hire someone else to build a home on land you own or lease, or you buy shares of a co-operative housing corporation.

The provincial government, meanwhile, has passed legislation that will standardize DCs levied by municipalities. Developers will be allowed to remit DC payments at the point of occupancy instead of much earlier in the planning approvals process, thereby saving on the cost.

For years, RESCON has been calling for a reduction on DCs. They only raise the price tag of a home and ultimately are paid by consumers.

Earlier, some municipalities stepped up on their own to address the situation. Vaughan approved a 50-per-cent cut to its DCs, Mississauga committed to reducing them by 50 percent for new builds, and 100 per cent for three-bedroom units in purpose-built rental buildings, and in 2024 Burlington passed a bylaw to reduce DCs which brought forward an approximately $1,500 reduction to the per unit DC rate.

A Canadian Centre for Economic Analysis report that revealed that taxes, fees and levies account for 36 per cent of the total cost of a new home purchase in Ontario – up from 31 per cent three years ago.

With the average price of a new home in Ontario at $1,070,000, consumers are paying nearly $381,000 in income taxes, corporate, sales and transfer taxes, and DCs and fees.

To address the housing crisis, it is critical that all three levels of government work to reduce taxation and other costs to build new homes.

The housing sales and starts situation is dire. We have blown through lows not seen since the 1990’s. In the Toronto area, for instance, new home sales in April marked a seventh consecutive month of record all-time lows. There were 310 new home sales in April, down 72 per cent from April 2024.

The recent government moves are welcome. The big question is whether the initiatives are enough. While they signal progress, they must still be augmented with additional follow-up measures.

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.