“Over time there have been provincial and municipal policies that were well-intentioned at the start, but have combined to put a strangle-hold on the construction of new housing,” OREA chief executive officer Tim Hudak stated. “As a result, we have fewer new homes being built today than 20 years ago.”
Hudak noted that it’s well past time for the government to decisively intervene by cutting through the red tape that currently surrounds new home construction in the high-demand, high-volume Toronto housing market.
“You can have housing prices be bid up so the next generation can’t afford a home, or you can increase housing supply to give more choices in the marketplace,” Hudak said, as quoted by the Toronto Sun.
Recently, Finance Minister Charles Sousa has indicated that the provincial government might be preparing to apply measures such as a foreign buyers’ tax to help remedy the Toronto situation.
“A year ago I was thinking, ‘Let market forces prevail,’” Sousa said. “But now I’m concerned about ... the ability of people to enter the marketplace.”
Last month, Ontario’s Financial Accountability Office warned that the province has already become heavily dependent on the health of Toronto’s housing sector, and that that even a small downward correction in the city’s home prices will lead to the Ontario suffering billions in losses.
“In the first decade of the 2000s, that revenue ranged between about $1 billion and $1.5 billion a year; in the last few years, it's risen to $2.5 billion,” markets observer David Reevely stated.
The FAO estimated that a 10 per cent decline in real estate prices would affect provincial revenues by $1.1 billion annually by 2020, and by as much as $2.2 billion every year in the worst-case scenario.
Effectively addressing Toronto’s housing affordability problem would mainly involve boosting the supply of available homes via increasing the number of new construction projects, according to the Ontario Real Estate Association.