Marco Vigliotti is the editor-in-chief of iPolitics and QP Briefing. He reports on politics in Ottawa and Toronto, and has covered Parliament Hill for the better part of the past decade. He also worked for the Ottawa Citizen/Sun and The Hill Times.

Marco Vigliotti

Editor-in-Chief

Barbara Patrocinio

Reporter

New data from the Canada Mortgage and Housing Corporation shows Ontario once again failed to meet its monthly home starts goal in May.

A February 2022 report from the province's housing affordability task force said Ontario needs to build at least 1.5 million homes by 2031 to meet growing demand. That works out to 150,000 new units each year, or 12,500 per month.

In May 2024, Ontario added 7,062 units, a 23 per cent increase from the same time last year but still roughly 5,400 units fewer than the monthly target.

In fact, Ontario hasn't once hit its 12,500 target since 2022, CMHC's numbers show.

Its best performance was in September 2022, when 11,236 housing starts were recorded, but since that time the province has only once exceeded 10,000 units — in June 2023, with 10,114 housing starts.

 obtained Ontario's historical, monthly housing start data from the CMHC dating back to 1990. Despite changes in government, economic ebbs and flows, and interest rate volatility, the province has never once hit 12,500 units in a single month over the past 34 years.

Since winning a second term in 2022, the Ford PCs have mainly focused on spurring new home construction, saying it's desperately needed to end an affordability crisis in the province.

But the numbers show the government has failed to meet its own targets, and the CMHC is skeptical it will do so in the near future.

The housing agency is actually expecting a decline in housing starts in 2024, with a slight rebound in the next two years.

Ontario and British Columbia, the CMHC said in its 2024 spring housing market outlook, are "expected to drive the decline in national housing starts for 2024," and the agency warned that "high home prices will make certain home types unaffordable, while developers may struggle even with apartment construction because of supply-side challenges, particularly financing costs."

But are the interest rates the only factor stopping the province from meeting its target?

Housing expert Mike Moffatt blamed a mix of factors that are in and out of the Ontario government's control.

“Ontario builds a lot of apartments and they tend to be very sensitive to interest rates. So the global kind of interest rate hike we've had over the last couple of years has really slowed down construction,” said Moffatt, the senior director of policy and innovation at Smart Prosperity Institute and founding director of the PLACE Centre.

The PCs have won praise and criticism for their efforts encouraging new home construction. They have won plaudits from some housing advocates for eliminating single-family zoning and committing billions to a new fund to help build housing-enabling infrastructure. But they've also received criticism for their handling of their now scrapped plan to develop parts of the Greenbelt, backtracking on freezing developer charges and opposition to four units as-of-right.

“They opened up the greenbelt to development, then reversed that. They froze development charges and then reversed that too, under Bill 185. So we haven't really seen much improvement in provincial policy again, because there's been so much backtracking on the policy front,” Moffatt explained.

Housing is a major focus for governments of all stripes in Canada, with the federal Liberals outlining a swath of measures in Budget 2024 aimed at adding 3.87 million new homes by 2031. These include loan programs for apartment construction, infrastructure funding, opening up public lands for development and tax breaks.

Canadian home prices have surged in recent years and rank amongst the highest in the G7. Data from the OECD in 2022 said that Canada’s home price-to-income ratio reached 148.16, outpacing other high-cost countries like Germany, the United States and the United Kingdom.

And a dire report from RBC earlier this year that found that a Canadian making the median household income would need to spend 63.5 per cent of their pay to cover the costs of owning an average home at market price.

Budget 2024: Liberals outline plan to build 250,000 new homes on public lands

For the opposition parties at Queen's Park, the PCs are to blame for failing to take bold action to restore affordability in the housing market.

Liberal MPP Adil Shamji called Premier Doug Ford "an obstacle to housing prosperity in Ontario that needs to be removed."

"The numbers from this month’s CMHC report are part of a broader pattern of devastating inactivity in the housing sector since Doug Ford took office. He has done nothing but break promise after promise to homebuilders, municipalities, and to everyday people," he said.

"Doug Ford’s 1.5M home promise was a hoax."

NDP housing critic Jessica Bell said the PCs' housing plan has been a failure, pointing to the province's failure to adopt two-thirds of the recommendations of its own task force on affordability.

"It has never been more expensive to rent or own a home in Ontario," she said.

“We have asked the Conservatives to take an effective approach to build the 1.5 million housing starts. People want to live in and their approach has been to waste billions upon trying to build the connections on the Greenbelt and it hasn't worked."

, it has only fully implemented 28 of the 74 recommendations of its own housing affordability task force, with another 19 dubbed as "in progress." The remaining 27 are deemed "under review," though it's unclear if like the fourplexes as-of-right recommendation, that means they aren't being considered.

The office of the Minister of Housing Paul Calandra wouldn't comment directly on specific policy measures but maintained the government's plan to build homes is seeing results, and blamed federal policies for dragging down home starts.

"The last three years have seen the highest housing starts in Ontario in over three decades. However, as a result of high interest rates and the high-inflationary and high-tax policies of the federal government, including the carbon tax, Ontario’s home builders continue to face a challenging economic environment for building," a statement from Calandra's office read.

"At the same time, in order to address the infrastructure gap we inherited after years of underinvestment by the Ontario Liberals, we’re investing over $3 billion dollars in housing-enabling infrastructure, which our municipal partners have identified as the number one obstacle they face in building the housing our province needs."

Housing starts down 7% last year compared to 2022: CMHC

But for Moffatt, the province should look at its own tax situation to help speed up home construction.

Taxes, he said, make up about 31 per cent of the cost of construction, and lowering the costs would speed up housing starts.

“We've seen the federal government do things like eliminate the GST on purpose built rental, but the province hasn't done as much,” he said.

Among these taxes increasing costs are development charges, which municipalities use to pay for infrastructure and connecting new housing with municipal services, such as sewers and roads.

But critics say onerous fees are stalling new construction and driving up the cost of homes, which is problematic as the country grapples with an affordability crisis largely fuelled by skyrocketing home prices and rents.

Moffatt explained that although these charges are municipal, they work under a provincial framework, so changing that may require the province to step in and compensate municipalities.

“I think this would be a game changer,” Moffatt said.

Moffatt also said implementing some of the recommendations of the province's own taskforce would be a good start, in particular, pointing to a recommendation to develop a municipal service model for things like water and wastewater which he said would drastically lower development charges.

“This would make a lot of difference. We're seeing British Columbia, for instance, allow for mid-rise single staircase apartment buildings and things like that. It's a very kind of European model, but it helps get mid-size apartment buildings built. Ontario should be looking at that,” Moffatt said.

He also flagged allowing fourplexes as-of-right as an important measure, though Ford has ruled this out, crediting the decision to push back from residents.

Finally, Moffatt said that the province should be requiring municipalities to use provincial population forecasts in their housing targets.

“It sounds like a small thing, but it's actually really important that municipalities over the last decade or so have drastically underestimated population growth,” he said.

70 per cent of new housing demand in Ontario last year came from newcomers: analysis

Population growth, particularly amongst new Canadians, has also played a role in the housing picture, namely by fuelling demand, with migration responsible for 98 per cent of the historic 1.27 million increase in Canada’s population in 2023, according to Statistics Canada.

Moffatt recently released data showing that some 70 per cent of the demand for housing in Ontario over the last year came from newcomers to Canada. While immigration is a federal responsibility, a sizeable portion of the demand is coming from temporary residents, namely international students, which falls under provincial purview.

Moffatt said all orders of government shoulder the blame for failing to plan for the historic increase in new residents and called for better coordination to ensure there’s adequate housing and infrastructure to accommodate the increased population.

“No one order of government owns population growth policies. Yes, the federal government controls immigration policy but until recently, they allowed provinces to decided how many international students [to let in],” he said earlier this month.

In May 2024, Ontario added 7,062 units, a 23 per cent increase from the same time last year but still roughly 5,400 units fewer than the monthly target. In fact, Ontario hasn't once hit its 12,500 target since 2022, CMHC's numbers show.

Why is Ontario falling behind on its housing targets?

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