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Houses under construction in Toronto last year. Prices in the city surged by more than 20 per cent in September 2016. (Graeme Roy/The Canadian Press)
Houses under construction in Toronto last year. Prices in the city surged by more than 20 per cent in September 2016. (Graeme Roy/The Canadian Press)

GREEN and FILIPOWICZ

To ease the GTA’s housing troubles, start by reducing red tape Add to ...

Ken Green is the senior director of energy, natural resources and municipal studies, and Josef Filipowicz is a policy analyst, both at the Fraser Institute.

Housing headlines are everywhere. Federal Finance Minister Bill Morneau recently announced a raft of housing reforms. Ontario Premier Kathleen Wynne and Toronto Mayor John Tory recently rang alarm bells on housing. And according to a report released yesterday by the Toronto Real Estate Board, Toronto house prices jumped more than 20 per cent in September.

Toronto home sales surge 21.5% as tight supply drives up prices (BNN Video)

Indeed, affordability in Toronto has eroded to an all-time low, with prices jumping by more than 50 per cent in the past five years, and rental vacancies sitting at 1.6 per cent.

It’s clear more housing is needed, for owners and renters alike, in Canada’s largest city and its surrounding areas, before places to live become too scarce.

But consider this. Behind the provision of new housing are industry professionals, from home builders, to engineering firms, to property developers. To provide new homes, they must navigate the various building permit-approval processes at city halls across the Greater Golden Horseshoe (GGH). In its latest study on land-use regulation, the Fraser Institute surveyed such professionals about permitting processes in the GGH.

Long and uncertain timelines for building permit approval by city staff can slow or ultimately reduce the supply of new homes. According to survey respondents, these timelines average more than 18 months across the GGH, with a high of more than two years in Georgina (York Region) and low of less than 15 months in Burlington.

Rezoning can add almost a year to approval timelines in some cities, or less than a month in others. This process can be especially costly to home building in cities where most new builds require rezoning, such as Toronto and Pickering. In fact, the typical cost of navigating the approval process in Toronto (more than $46,000 a housing unit) dwarfs the cost in Hamilton (less than $21,000 a unit).

Moreover, local councils and community groups, which can prevent the building of new housing, represent the strongest deterrent to new home building in King Township, Toronto and Oakville. And unfortunately, council and community opposition tends to be strongest in cities where housing values are highest, begging questions about the motivation of local homeowners to maintain or increase property values by deterring new housing construction.

When all measures of residential land-use regulation are combined, the neighbouring cities of Burlington and Hamilton rank as the GGH’s least regulated cities. Conversely, King Township and Ajax rank as the most regulated. Toronto is the fourth-most heavily regulated jurisdiction in the GGH, sitting at 20th out of 23 cities studied.

These rankings are not trivial. Reducing or slowing the number of new housing built in Canada’s most important economic region can have negative consequences for newcomers or young families. A reduced pool of housing in a growing region can push prices beyond their reach, or eat into the higher wages they earn relative to smaller communities.

On the plus side, the wide range of results across the cities included in the study show that municipalities can learn from one another. For shorter building permit-approval timelines, look to Burlington. For reducing compliance costs and fees, look to Hamilton. It is locally that best practices can be incubated and shared, not provincially or federally.

As the housing debate continues to make noise in Ottawa, Queen’s Park and city halls across Ontario, it’s important to remember the fundamentals of the housing market. World-class, growing regions such as the GGH can only remain successful if their most important asset – people – can find appropriate housing. Reducing barriers to the construction of new homes can help ensure that Canada’s largest urban area will keep attracting and retaining the best and brightest, as it always has.

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