Canadian home prices have been on the decline ever since last April, after the introduction of a GTA foreign buyer tax. But according to a new report, prices could be a lot lower, if government policy focused on increasing housing supply.
A new report from the C.D. Howe Institute has found that between 2007 and 2016 buyers in Canada’s hottest housing markets paid an average of $229,000 more per home, due to government regulations which make it difficult for developers to build single-family homes.
“The cost of housing has been going through the roof in many parts of Canada,” reads the report. “Most government policies have focused on curtailing the demand for housing, but they have not taken meaningful steps to increase housing supply.”
According to the report, development charges, zoning regulations and building restrictions related to Ontario’s Greenbelt have added $168,000 to the price of a single-family home in the GTA, and $644,000 to one in Vancouver.
“A well-functioning housing market results in the market price of housing being close to the feasible cost of constructing it,” reads the report. “If prices persistently exceed this construction cost, it is often due to barriers that inhibit new construction. These barriers often stem from excessive regulations.”
The report suggests that municipalities should ease restrictions around developing agricultural land by simplifying and updating zoning bylaws, and reducing development charges.
It also noted that if land dedicated to the Ontario Greenbelt was opened up for development, it could lower single-detached home prices by $50,000 in Hamilton and between $25,000 and $30,000 in the York and Halton regions.
But a recent suggestion from Ontario PC Leader Doug Ford to develop the Greenbelt was met with swift backlash from his opponents and several industry experts. According to Ryerson Centre for Urban Research and Land Development senior researcher Diana Petramala, easing zoning restrictions is all well and good, but developing the Greenbelt is a bad idea.
“I don’t think that the answer to any of the urban planning issues we’re facing in Ontario is to develop the Greenbelt,” she told BuzzBuzzNews.
She says it’s not a quick fix — it would take over a decade to start to see a change in supply if it was opened up for development. “It’s a 10 to 15 year trajectory, maybe even more, and you can’t do it overnight,” she says.