Permanent HST relief, single-stair codes and shorter approvals are the fixes Ontario’s housing market needs

Despite the urgent need to dramatically accelerate homebuilding, a new report done for RESCON shows that housing starts have declined sharply and industry job losses are mounting.

The data is sobering. Condo apartment starts in 2025 have plunged 52 per cent compared to 2021-24 averages. Ground-oriented housing is down 43 per cent. In the Greater Toronto and Hamilton Area, there were zero new condo launches in the first quarter of this year — an unprecedented collapse. Sales have followed suit, falling 94 per cent below the 10-year average.

This is not a cyclical dip. It is a structural failure.

The core issue is straightforward: builders cannot produce homes at prices buyers can afford. Until that changes, supply will not recover — no matter how strong demand may be.

The encouraging part is that much of this crisis is policy-driven. That means it can also be policy-corrected. If governments want to restore housing affordability, five reforms stand out as essential.

Development charges are crushing affordability

Government taxes, fees and levies now account for more than a third of the cost of a new home in Ontario. In some cases, municipal charges alone add well over $100,000 to the price. These costs have risen far faster than inflation.

The current model forces new homebuyers to shoulder the upfront cost of long-lived infrastructure — roads, sewers, transit — that will serve communities for decades. That approach is neither fair nor efficient. Infrastructure should be financed over time, aligned with its lifespan, not loaded onto the first buyer.

What’s needed is structural reform that shifts infrastructure funding back toward long-term financing tools. Without it, affordability gains will evaporate as soon as short-term programs expire.

Approval timelines are killing projects

Time is money in development, and Ontario’s approval system is extraordinarily slow. In the GTA, approvals routinely take 18 to 24 months — nearly double the national average. Each month of delay adds thousands of dollars in carrying costs per unit. More importantly, uncertainty kills projects before they even begin.

Builders cannot take on multi-year approval risks in a high-cost environment where financing depends on precise timelines. The solution is not complicated: clear, enforceable provincial timelines must be established, ideally under 12 months, with consequences for non-compliance. Predictability, not just speed, is what the market needs. Without it, capital will continue to sit on the sidelines.

HST relief must become permanent

Taxes on new housing don’t just affect builders — they directly impact the ability of buyers to enter the market. The HST, applied on top of already inflated prices including embedded development charges, creates a compounding burden.

Recent moves to remove or rebate portions of the HST for new homes under $1 million are welcome. But as a one-year measure, they do little to change long-term market behaviour. Making the relief permanent would provide immediate, tangible affordability gains for buyers.

Industrialized construction must scale up

Ontario’s construction productivity has been declining for decades. Since 2001, output per worker has dropped by more than a third — a staggering reversal in an industry that should be benefiting from innovation.

The traditional, site-built model is struggling to keep pace with labour shortages, rising costs and increasingly complex projects. Industrialized construction — modular, prefabricated and off-site manufacturing — offers a viable path forward. These methods can cut construction timelines by 30 to 50 per cent and significantly reduce labour requirements. They also improve quality and reduce waste.

Yet adoption remains limited, in part because the industry lacks the scale and incentives to transition. Targeted public investment and procurement strategies can change that. If governments are serious about boosting supply, they must help modernize how homes are built.

Building code reform can unlock missing middle housing

A significant portion of urban land in Ontario cannot be efficiently developed under current building code requirements, particularly the mandate for double-staircase designs in mid-rise buildings.

Adopting single-stair configurations — common in Europe and recently embraced in British Columbia — would allow more flexible, cost-effective designs for buildings up to six storeys. This change could unlock a substantial share of underused urban lots and enable the kind of gentle density that fits within existing neighbourhoods.

Each reform involves trade-offs, whether it’s reduced municipal revenue, constrained local planning discretion or disruption within the construction industry. But the alternative is worse: a housing system that continues to undersupply, overprice and ultimately fail the people it exists to serve.

The crisis has been decades in the making. It will not resolve itself. But with deliberate, co-ordinated action across all levels of government, it can be reversed.

The market is signalling that the system is broken. The question is whether policymakers are prepared to fix it.

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