Build For Growth: Housing Affordability
Band-Aid solutions will not address a generational challenge
It seems that every month or so, a new poll is released that shows that housing affordability is top of mind for GTA residents, and almost every week media covers the issue from a variety of angles. Commentators examine residents’ ability to purchase a home, the percentage of income spent on rent, the impact of new government rules, housing availability and the far-reaching societal consequences of the current situation.
So far, government interventions have focused on the demand side, including efforts to keep rent down through rent control, increasing the cost of housing for non-residents through the Non-Resident Speculation Tax, and more stringent mortgage qualification requirements. These steps have had the desired cooling effect but, as evidenced by experience in other markets, the effects may be transitory as the market adjusts. These are Band-Aid solutions that address the symptoms but do not deal with the fundamental issue. If we are to truly solve the challenges facing the GTA housing market, governments also need to address the supply side of the equation.
Unfortunately, it takes a long time to add new housing in our region. The rules and processes that worked in the past now struggle to keep up. That means that these days it takes approximately 10 years to complete a new highrise or lowrise project in the GTA. It is not just a question of the actual construction, but also the planning, zoning, approvals, infrastructure and servicing of land required to support development. This slow pace of bringing new homes to market has two practical implications. First, it exacerbates tight supply in a high-demand region, keeping prices up. Second, it means that unless current population projections of 9.7 million people in the GTA by 2041 are wrong, or there is a significant increase in migration away from the region, affordability challenges will be with us for some time.
As the municipal election campaigns unfold, we have heard pledges focused on increasing housing supply. These campaign promises have tended to focus on increasing the supply of affordable rental properties rather than on increasing housing supply overall. There are two problems with this approach. Almost two-thirds of Canadians live in homes they own rather than rent and these efforts do little for those aspiring to own. More importantly, and sadly for those trying to put an affordable roof over their heads today, given the lead time for adding new housing stock, these campaign pledges will not materialize as new homes any time soon.
If there is to be a meaningful solution to the generational housing challenge facing the GTA, governments must focus on removing the barriers to adding new housing supply, at the pace required, in the density desired under provincial growth plans, and preferably with access to transit.
That is why, as the municipal elections approach, we are encouraging GTA residents to have conversations with their local candidates about housing affordability and supply. You can send an email to your candidates at BuildForGrowth.ca
Dave Wilkes is president and CEO of BILD (Building Industry and Land Development Association), and can be found on: Twitter.com/BILDGTA) Facebook.com/BILDGTA YouTube.com/BILDGTA and BILD’s official online blog: BILDBlogs.ca