RESCON: Indeed, these are interesting times

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Runaway taxes, slow approvals, political inertia will need to be addressed

The old adage, “May you live in interesting times,” is believed to be the English translation of an ancient Chinese curse. The expression is ironic as interesting times are most often periods of trouble.

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The residential construction and new housing industry, you could say, are indeed living through some very interesting times.

While interest rates and inflation have come down, the tax burden on new housing, red tape and bureaucracy stymieing development, and a persistently slow development approvals process have nibbled away at affordability and made it difficult for many working people to acquire a new home.

There’s also the fact we will soon be in the midst of a provincial and possible federal election, along with the no-small issue of tariffs coupled with a disturbingly aggressive U.S. administration still looming.

However, our upcoming elections could prove to be a positive for the new housing industry as politicians will be forced to address the housing crisis and propose reforms that may otherwise have been stalled.

On the provincial front, we recently saw some announcements aimed at spurring more housing construction: $325 million for water infrastructure projects that will benefit new homes; authorization for Ontario Power Generation to sign contracts for refurbishment work at Pickering Nuclear Generating Station; and $100 million for training workers in construction, the trades and other sectors.

At RESCON’s recent annual general meeting, we also heard from Premier Doug Ford who reiterated the need to cut red tape, regulations and fees to move housing forward. He acknowledged that housing demand has outstripped supply for too long and young families and newcomers are locked out of the market.

The province has taken steps, including the announcement of $970 million via the Housing-Enabling Water Systems Fund to help build more homes across 60 municipalities, the first stream of the Municipal Housing Infrastructure Program to repair roads and bridges, and the $1.2 billion Building Faster Fund. The new Provincial Planning Statement introduced last fall is also cutting red tape.

However, as is evident by the latest statistics on housing starts and sales, there is an urgent need for more action. I am hopeful that the upcoming elections will shake the trees.

According to the CMHC, 74,573 housing units were started in Ontario in 2024, down nearly 15,000 from 2023. There were significant drops in all types of housing starts – from condos to single-detached. In the GTA, new home sales in December were down 46 per cent from the same month in 2023.

In Toronto, where projects are supposed to be cleared in 90 days, approvals processes are taking at least 600 days to advance.

Meanwhile, we are facing runaway taxation. Development charges remain a substantial portion of the tax burden on new housing. These must be reduced.

If the price of consumer items increased at the same rate as development charges, today a litre of gas would cost $33, a small Tim Horton’s coffee would be $57, a Big Mac would be $145, and a four-litre bag of milk would be $328.

The Conservatives at the federal level and Liberals at the provincial level are floating plans to reduce the tax burden on new housing.

The provincial Liberals recently promised that, if elected, they’d scrap development charges on new housing, which would cut costs by up to $170,000 on family-sized homes of 3,000 square feet or less. The federal Conservatives, meanwhile, promised that, if elected, they’d cut the sales tax on new housing under $1 million, which would reduce the cost of an $800,000 home by $40,000. However, the other federal political parties have not yet weighed in on their plans to address the issue.

RESCON has joined a coalition of industry stakeholders that is calling for a 75-per-cent decrease in development charges, which would reduce them to the more reasonable level they were at in 2015.

Presently, 36 per cent of the cost of a new home is due to taxes, fees and levies – up substantially from 31 per cent just three years ago, according to a report that was prepared for RESCON. Consumers are paying nearly $381,000 in taxes and fees on an average-priced home of $1,070,000. Vaughan and Burlington have lowered their charges. We hope other municipalities will follow suit.

These are unprecedented times and we need unprecedented solutions. There is no time to waste.

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.