A new study commissioned by the Building Industry and Land Development Association (BILD) reveals that the gap between Ontario’s housing stock and its rapid population growth is the widest it has been since records began in 1972. The advocacy group also noted that the region is seeing serious decline in development applications, with only 1225 in 2024 compared to 2428 in 2021.
The study found that the root cause of the crisis is a historic undersupply of new housing units, coupled with rapid population growth that has resulted in drastic increase in demand and further exacerbating the impact on affordability and accessibility in the Greater Toronto Area (GTA). It was also noted that the application submissions to municipal planning boards have dropped significantly and that while timelines for building permits have improved since 2020, they still remain exceptionally high. The rise in Municipal Development fees has also not helped the situation.
In 2014, Ontario’s population was growing at a rate of 1.6 people for every home built with around 87,368 housing completions per year. By 2022, this ratio has grown exponentially to 5.5 new residents for each new home being built and only 71,838 new homes built, the highest figure recorded in over 50 years.
The study also finds that for every month in delay of approvals adds $2673 to $5576 per month per unit and the total length of the approval process can add upto $43000 to $90000 per unit per application. This data clearly show that there is a huge disparity between the urgency and the desire to address the housing supply issue. One of the key reasons for this is the excessively high fees associated with delays and regulatory and tax burdens, with Justin Sherwood, Senior Vice President of Communications at BILD stating that fees, costs and charges account for almost a quarter of the cost of building a new home.
In my opinion, the Provincial and Municipal governments must work in collaboration and prioritize reducing bureaucratic red tape associated with building approvals. A major chunk of the fees are the municipal charges which add up to $122,387 to the price of a new condominium and $164,920 for a single family residence. By expediting permit processes and simplifying zoning laws, municipalities can help facilitate quicker construction timelines.
In an effort to address the issue, the Ontario provincial government have proposed simplifying the appeal process for rejected permits and introducing exemptions for certain units from municipal zoning by-laws and building requirements such as mandatory parking. These changes were introduced in Bill 23 and Bill 185. However, I feel that these do not go far enough. Instead of focusing on stimulating demand by giving financial incentives, they should look at addressing supply side constraints which include reducing development charges, fees and taxes that restrict new construction. In this way, these authorities can create an environment that can bring about sustainable growth in the housing sector.
As shown in the data in this report, the real estate marketplace is really competitive and always continuously evolving. Thus, the decision to buy or sell real estate should always take into careful consideration all such factors. In this vein, it is crucial to carefully evaluate your financial situation, long-term goals and local market conditions before making a decision. As a real estate professional with over 20+ years of experience in the industry, I have first-hand witnessed the housing affordability crisis and worked with both buyers and sellers in this market in my every-day practice. If you need expert guidance for your buying and selling needs, please don’t hesitate to reach out to me.
.
SP Singh Ahluwalia 
Great article.. In order to address this issue, the government, developers and builders should come together and raise funds to invest in infrastructure ( technology and man power ) required to speed up the process of approval which will automatically bring down overall costings.