Delays, municipal fees behind slow home construction in Ontario, report finds

The pace of new-home construction in Ontario has never been further behind the province’s population growth in the past 50 years, according to a new report from a developer industry group that blames spiralling municipal fees and red tape for the province’s housing morass.

The report, to be released on Wednesday by the Building Industry and Land Development Association (BILD) – which represents the Greater Toronto’s Area’s biggest developers – paints a stark picture of the failure to build enough housing in the province, despite a succession of legislative moves over the past six years from Ontario’s Progressive Conservative government aimed at fixing the housing crisis.

The research, conducted by Altus Group Economic Consulting, points to provincewide numbers showing that Ontario now has the lowest number of new-housing starts per new resident since 1972, when record-keeping began. Population growth, driven by the recent spike in immigration, will hit more than 463,000 this year, the report expects, even as housing starts continue to sink significantly below their 2021 high of just over 96,000.

In the 15 GTA municipalities that the BILD report surveys in detail, the population grew on average by a total of 139,357 people a year between 2020 and 2024. However, those communities only registered an annual average of 44,541 housing starts.

The report’s numbers are the latest evidence to suggest that without drastic action, Ontario Premier Doug Ford will miss his target of getting 1.5 million new homes built by 2031.

The BILD report says two key problems have hamstrung GTA builders: long waits for bureaucratic approvals at the municipal level and sharply rising fees on new construction known as development charges, which local governments levy to pay for the infrastructure new housing requires, such as roads or sewers.

Both are items the provincial government has previously vowed to tackle. But last year, it backed off requiring municipalities to phase-in new development charges after local governments warned the move and other development-charge changes, would cost them billions in needed money for infrastructure.

The BILD report says development charges have only continued to shoot upward. Including other fees, the 15 GTA municipalities in the study now charge developers an average of $164,920 per low-rise unit, up $41,925 in the past two years. On high-rise units, the report says, the average bill is now $122,387, up $32,254 from 2022.

Ontario’s Minister of Municipal Affairs and Housing, Paul Calandra, was not made available for an interview. In an e-mail, his press secretary, Bianca Meta, said the province is cutting red tape and getting homes built faster. She pointed to the exemptions and discounts on development charges for non-profit and rental housing that the government did not withdraw. And she cited the $3-billion Ontario has committed for new municipal infrastructure.

BILD CEO David Wilkes, whose group is also launching a new ad campaign aimed at getting municipalities to slash fees and wait times, says the housing crunch will only worsen in the coming years if urgent action isn’t taken.

He suggested that Ontario could need a “development charge holiday” in the short term to revive the many housing projects now stalled and unable to get the financing they need to proceed. And in the long-term, he said, the burden of development charges and who pays for new infrastructure, needs to be reviewed.

“The cost to build is so dramatically out of whack,” he said in an interview, noting that sales and applications to build new homes have sunk dramatically, meaning less housing is in the pipeline. “If you think we have challenges now, I don’t want to consider what we will be challenged by in two or three years.”

The report does say that all but five of the 15 GTA municipalities it surveyed had sped up their approval timelines for housing projects since 2022. But on average, it still takes 20.3 months to get a development application okayed in the GTA. While that’s a 2.4-month improvement from the 22.7 months it took in 2022, the study says, these delays can mean thousands of dollars a month in property taxes and other added costs associated with holding vacant land.

The fastest planning department belongs to Barrie, an hour north of Toronto, where it takes an average of 11.2 months for approval. The slowest is suburban Richmond Hill, at 33.6 months. In Toronto, the paperwork still takes an average of 25 months, but this is a seven-month improvement over 2022.

While he praised Toronto’s efforts to speed up the paperwork, Mr. Wilkes said the economic slump has also seen applications slow to a trickle so developers had expected more improvement across the GTA.