By Richard Lyall
RESCON
The residential construction industry is facing the most challenging period it has ever encountered. The housing supply and affordability crunch continues, due to red tape, bureaucracy, excessive taxation, fees and levies and high interest rates, among myriad other reasons.
Unfortunately, it looks like we are in for another bumpy ride in 2024. At RESCON’s annual general meeting recently, we received a rundown on the metrics from market specialists. Let’s just say they were not good and point to the fact it will take a concerted effort to right the ship.
Housing starts lagging
Both low- and highrise housing starts have slowed dramatically, and we are drifting further away from the targets we need to reach to achieve housing affordability. In Ontario, for example, the prospect of building 1.5 million new homes by 2031 is in serious jeopardy unless action is taken. Housing starts in the province were less than 90,000 in 2023. The number of starts are expected to dip to 80,000 in 2024, before rising to 85,000 in 2025 and 88,000 in 2026.
Meanwhile, development charges imposed on new housing continue to rise, as do taxes fees and levies. All of these factors are barriers to building the residential housing that we need.
We must address these problems and bring the fees down to a more manageable level if we are to achieve the shared goal of providing housing for all. Municipalities have limited tools at their disposal, so reducing the fees will require collaboration with senior levels of government.
We are also in need of financial policies that will support construction of affordable housing and help first-time buyers. They cannot afford homes and are leaving our cities in droves because they’ve been priced out of the market.
HST rebate for first-time buyers
One approach is to provide a rebate of the HST for first-time buyers. Another is to reinstate tax policies such as those in place in the 1960s and 1970s that spurred residential construction.
Importantly, we must also tackle the slow development approvals process and move towards digitization. Many cities and towns have systems that are simply too slow, and cumbersome, which results in delays in approvals. We must streamline the planning and approvals processes and mandate that a common digital platform be used by all municipalities.
Development applications in the City of Toronto are taking 908 days for site plan approval, or 713 days for a zoning bylaw decision.
We need some level of uniformity across Ontario so that repetition and unnecessary impediments are removed to building homes in all jurisdictions. This would take the form of better information sharing, collaboration, uniform platforms and predictable policymaking.
One Ontario platform
As an example, RESCON has been requesting that the One Ontario platform be funded across the province. The platform provides an interoperable data exchange layer that connects siloed information and processes across the many authorities involved in approvals.
Over the years, One Ontario grew from a coalition-building research initiative to a pilot project, and recently to a software platform with the potential to improve data exchange and communication between the many disparate organizations involved in a development approval.
With government support, One Ontario would improve process transparency and standardization. It is now ready to deploy but requires adoption by the provincial government.
Canada Mortgage and Housing Corp. provided funding for the pilot two years ago, but should review and consider funding the platform more broadly so it can be rolled out across Ontario.
Sadly, many of our municipalities continue to lag behind those in other jurisdictions around the world when it comes to innovation.
Need to do better
Canada ranks 34th out of 35 Organization for Economic Cooperation and Development countries when it comes to timelines for approvals to undertake construction projects. Further, the World Bank ranks Canada 64th out of 190 countries in terms of construction permitting.
We need to do better. More needs to be done to address these significant shortcomings. We need to implement the kinds of approvals processes that other successful jurisdictions have been using.
The window of opportunity to turn the housing situation around is shrinking.
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.
