Housing affordability—a welcome addition to Ontario’s election issue agenda

The Ontario Liberals recently caused a stir by releasing video of Ontario PC Leader Doug Ford (pictured above) pledging to “open a big chunk” of Ontario’s Greenbelt to homebuilding if elected premier, in an effort to make housing in the region more affordable. The Greenbelt is a swath of rural land on the outskirts of the Greater Toronto Area (GTA) and Hamilton area where most types of development are forbidden.

Environment Minister Chris Ballard criticized the idea, stating Ford’s proposal “puts farmland, wildland and wetlands… at risk of being encroached and even replaced by new suburban development.” Green Party Leader Mike Schreiner went further, describing the idea as “idiotic.”

Shortly after the criticism poured in, Ford walked back the idea of Greenbelt development completely, stating “…we won’t touch the Greenbelt. Simple as that.”

With Ballard, Schreiner and now Ford all apparently dead set against homebuilding in the area, they must each reveal their strategies to increase the supply of housing and promote affordability.

The simple fact is the region’s population is growing, and the resulting demand for housing is putting upward pressure on prices. Specifically, between 2011 and 2016, the combined Toronto, Hamilton and Oshawa Census Metropolitan Areas grew by almost 400,000 inhabitants.

All these people must live somewhere, and without commensurate increases in housing supply, growing demand will exacerbate affordability problems.

So where will new housing come from?

There are really only two ways for Toronto to grow—either out, into the surrounding rural area, or up, with taller buildings and more density. But government policies currently restrict both options.

Ford’s withdrawn idea of Greenbelt development would have removed an obstacle to outward expansion, from the fringes of the 905 area, and represent a resumption of the GTA’s traditional postwar development pattern, which lasted until the mid-2000s, when provincial policies such as the Greenbelt and the Places to Grow Act were introduced to curb homebuilding on the urban fringe.

With these limits on outward growth, the need for upward growth through more dense building options such as apartments and townhomes became even more important. But again, there’s good evidence governments—both local and provincial—are creating substantial barriers to this form of housing supply growth.

Specifically, for new homes in the GTA to get built, homebuilders and property developers first must obtain building permits from city hall. This process takes more than one-and-a-half years, on average, across the GTA, meaning significant delays before shovels can break ground. And the process is fraught with additional costs and uncertainty, with substantial local fees on new homebuilding.

A recent report by the Canada Housing and Mortgage Corporation (CMHC) explored the impacts of these policies and found they play an especially strong role in driving up prices in the GTA, far surpassing other factors such as real estate speculation.

The single most important strategy governments can employ to increase housing affordability is to enable the housing supply to grow. Ford has walked back his idea of opening the Greenbelt to development, but hopefully the recent kerfuffle will prompt both champions and skeptics of the Greenbelt to engage in robust discussion about the best ways to remove policy barriers that prevent this growth from happening.