Seeking solutions to the structural barriers of the GTA’s housing challenges

Over the past 18 months, high interest rates have significantly impacted the Greater Toronto Area (GTA) housing market, slowing demand for new homes by half compared to historical averages. This has led to increased inventory and moderated price by 15-20%, depending on the housing type and location. Meanwhile, the GTA’s growing population has created a pent-up demand for new housing. 

As interest rates decline, we can anticipate that demand will return. However, this recent period of reduced demand and rising inventory has hidden some pressing structural issues that will quickly become evident as the market returns. To address these issues, we need to answer several critical questions: 

Why are municipal approvals in the GTA so slow? 

On average, obtaining municipal approvals for new homes in the GTA takes roughly two years, with some municipalities taking almost three years (depending on the type of application). In stark contrast, other Canadian cities like Calgary can complete the process in just five months and London in ten. 

These approval delays not only slow the supply of new homes but also increase costs. For example, according to our 2022 benchmarking study, delays for high-rise condos can add $2.60 to $3.30 per square foot each month, potentially increasing costs by $37,000 (20-month average) or up to $70,000 (34-months) for a 700 sqft apartment. What causes these delays, and how can we expedite the approval process to reduce costs? 

Why are municipal fees for new homes so high? 

In the GTA, government fees and taxes make up 25% of the cost of a new home, with over half of this amount coming from municipal fees like development charges (DCs), parkland fees, and community benefits charges (CBCs). These fees fund services and infrastructure such as parks, roads, and water systems. 

Yet, there is a glaring discrepancy when comparing these costs with other regions. For instance, Ottawa’s DCs are roughly half of those in Pickering for high-rise apartments, and London’s charges are about one-third of Brampton’s for single-family homes. Are the costs of laying a sewer line or building a sidewalk truly three times higher in the GTA than elsewhere? 

Why is there such a deficit of serviced land for growth in the GTA? 

The GTA faces a critical shortage of serviced land needed for new housing. This scarcity drives up lot prices, which in turn raises the cost of new homes. This problem appears more pronounced in the GTA compared to other regions. What are the root causes of this deficit, and how can we address it? 

In the coming months, BILD will explore these issues and propose solutions to tackle these structural barriers. Homeownership in the GTA feels impossible for many, but our goal is to make owning a home possible again.   

Dave Wilkes is President and CEO of the Building Industry and Land Development Association (BILD), the voice of the home building, land development and professional renovation industry in the GTA. For the latest industry news and new home data, visit www.bildgta.ca.