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For so many Ontarians, particularly those in the Greater Toronto Area (GTA), it may seem homeownership will forever remain out of reach. The benchmark price for new single-family homes in the region in September was around $1.5 millionwhile the benchmark price for condominiums was just over$1 million. Although a 15 to 20 per cent decrease from what prices reached in 2022, it is no wonder that purchasing a home can seem impossible. There are a number of variable factors why this is the case.
It is likely not common knowledge that government fees and taxes account for 25 per cent of the cost of the average GTA home. Of this 25 per cent, a large part is attributable to the HST. When it was introduced, the federal government offered rebates to offset the tax burden, tailored to 1991 housing prices. However, despite a 270 per cent increase in home prices from 1990 to 2023, the federal government has not changed rebate thresholds. This means thateffectively, new homebuyers in the GTA are not eligible for a federal government rebate while Ottawa collects an additional $42,000 in HST revenue per single-family home.
Based on sales in Ontario alone, the federal coffers have benefited by as much as $4 billion, the lion’s share in the last decade. Adjusting the HST threshold to reflect today’s home prices would save new homebuyers tens of thousands of dollars. The federal conservatives, if elected, have promised to do just this. Their pledge marks a welcome policy position that will benefit the average Canadian.
Meanwhile, delays in municipal approvals in the GTA hinder housing supply growth, limit choice, and drive up the cost for homebuyers. The Ontario Planning Act requires municipalities to render a decision on planning approvals within specific timelines. Yet, there isn’t a municipality in the GTA that meets these timeframes or even comes close. The implication is not only limited choice, but also added cost.
While many new housing-related costs, such as materials and labour, are based on market conditions, lowering housing taxes is within the control of governments and is one of the fastest and easiest solutions to decreasing housing cost. As previously mentioned government fees and taxes comprise 25 per cent of a new home’s cost in the GTA, with municipal fees accounting for more than half, some of the highest levels in North America. Even during a housing crisis, these municipally applied costs have continued to increase, rising by an average of $32,000 for a typical high-rise apartment and $42,000 for a typical single-family home, since 2022.
Dave Wilkes is President and CEO of the Building Industry and Land Development Association (BILD), the voice of the home building, land development and professional renovation industry in the GTA. For the latest industry news and new home data, visitwww.bildgta.ca.