Ontario’s housing outlook seems bleak. Here’s how the major parties plan to jumpstart construction

February 6, 2025 Canuck

With Ontario’s election campaign well underway, Heather Caswell says affordability — and in particular the cost of housing — are top of mind.

The 34-year-old freelance consultant lives with her husband in a rent-controlled, two-bedroom unit in Toronto. The couple pays about $1,700 per month, well below the average rent for comparable homes in the city.

But the sky-high prices of most types of housing in Ontario means the pair feel “locked in,” unable to contemplate moving to a home without rent controls, let alone the prospect of buying a place.

“For us, it would be a massive, massive jump in costs. I have friends who just rented for over $3,000 a month for a one-bedroom,” Caswell said. “That is such a deterrent to us for leaving, or changing, even career-wise … I think it just kind of keeps us in stasis.”

She’s far from alone. Hundreds of readers have told CBC News that housing is their number one ballot box issue. The same was true during the last provincial election in 2022.

During that campaign, PC Leader Doug Ford promised to build 1.5 million new homes by 2031. The target was the first recommendation made by Ontario’s housing affordability task force earlier that same year.

Fast forward to 2025 and progress on new construction has stalled, while new home sales of all types have stagnated in many parts of the province.

Reasons for the trends are complex. Aggressive interest rate hikes combined with supply chain shocks from the COVID-19 pandemic vastly increased the costs of financing and building developments. Elevated interest rates also dampened demand from would-be buyers.

Development charges under the microscope

While the provincial government can’t influence interest rates, that hasn’t stopped Ford’s political rivals from attacking his housing record. Ontario Liberal Leader Bonnie Crombie called it an “abject failure,” while Green Leader Mike Schreiner said this week the “only homes that Doug Ford seems to want to build are mansions in the Greenbelt.”

The province is currently nowhere near on track to hit its 2031 target, and the government’s own forecasts show no sign the pace of new housing starts will accelerate significantly before 2028.

The outlook has Ontario’s major political parties pitching plans to build more housing, and some key themes have emerged, particularly around reducing costs of construction and red tape.

Both the Ontario Liberals and Greens say they would scrap development charges for certain types of housing — the Liberals on new homes under 3,000 square feet and the Greens on those under 2,000 square feet built within existing urban boundaries.

Development charges are among the taxes and fees levied on new developments by municipalities, which then use the revenue to fund infrastructure projects. The charges have recently come under intense scrutiny by some industry groups and housing advocates, who say hefty increases are unnecessarily inflating the costs of building. Those costs are then passed on to buyers.

Dave Wilkes, president and CEO of the Building Industry and Land Development Association (BILD), said development charges account for roughly 25 per cent of the costs of constructing single-family homes and condos in much of the GTA.

“So if you look at that in terms of a consumer’s mortgage, they are paying the first six years, approximately, of a 25-year mortgage due to municipal fees and taxes,” Wilkes told CBC News.

“That’s a trend that we believe just cannot continue if we are going to be able to build homes that people can afford.”

Some municipalities have already taken steps to slash development charges. Mississauga recently cut them by 50 per cent, while Vaughan reverted to its 2018 rates and froze them for five years.

In 2022 legislation aimed at streamlining project approvals, the Ford government said it would phase-in discounts on development charges for some builder applications. The PCs later reversed those changes after pushback from municipalities that argued they were a critical revenue tool.

The Liberals and Greens have both promised new provincial funds to make municipalities whole for any lost revenues from changes to development charges.

Workers move lumber at a condo construction site in Toronto on March 20, 2020. — Housing experts and building industry groups say streamlining the municipal approval process for new developments is critical to increase the pace of new construction in the province. (Evan Mitsui/CBC)

‘Paralysis by analysis’

Another key theme among the major Ontario parties is getting new developments built faster.

Cutting red tape was central to the PCs approach to the housing crisis in recent years. That included a sweeping 2024 bill that gave municipalities powers to address stalled developments, more easily increase density around transit and prioritize ready-to-go projects, among other changes. It was the first major piece of housing legislation passed the Ford government in the wake of the Greenbelt land swaps scandal.

The PCs similarly earmarked billions of dollars for housing infrastructure, like water and wastewater, to prepare undeveloped land for housing. They also set specific yearly housing benchmarks for Ontario’s largest municipalities and provided significant funding incentives for those that reach at least 80 per cent of those targets in any given year.

Too many proposals are still getting bogged down in the permitting process, adding to costs and risks for builders, says Murtaza Haider, director of the Urban Analytics Institute at Toronto Metropolitan University.

“We have created mechanisms and processes that are now gridlocking us. It’s paralysis by analysis,” he says, adding that in Toronto it can take up to three years to get approvals for some projects.

“So much goes into the review of these applications that nothing gets out in time to be built.”

On that front, the New Democrats, Liberals and Greens have all said they would legalize fourplexes on land zoned as residential across the province — a policy recommended by the housing task force and already adopted by several large municipalities.

But allowing fourplexes as of right was a step too far for Ford, who said last year that communities would “lose their minds” and “wouldn’t stop screaming” if the measure was introduced.

For its part, the NDP also previously pitched what they are calling “Homes Ontario,” a provincial agency that they say would build 250,000 affordable homes by offering funding, low-cost financing and public land for non-profit and co-op housing providers.

Tariff threat adds uncertainty to housing outlook

Complicating things further is the threat of U.S. tariffs on Canadian goods.

While Canada secured a 30-day reprieve from the threat of 25 per cent tariffs, such levies would only further destabilize Ontario’s development industry, Wilkes said.

In a campaign stop this week, for example, Schreiner noted the province imports $3.5 billion of glass each year from the U.S. for housing construction.

Wilkes said ensuring consumer confidence will be essential to ramping up the pace of construction, since developers need to know there is a market for new homes.

“We have an issue where the combination of the cost to build has gotten too high, and consumer confidence continues to be shaken and is further shaken with these threats we have with our largest trading partner,” he said.

The next government needs to ensure homebuyers have confidence in Ontario’s economy, he continued.

“I can’t overstate that. We really need to have that stability for the market to come back.”

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Canada News

Ontario’s housing outlook seems bleak. Here’s how the major parties plan to jumpstart construction

Development charges under the microscope

‘Paralysis by analysis’

Tariff threat adds uncertainty to housing outlook

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