Governments Must Act in Unison to Tackle the Housing Crisis

A car runs more smoothly when the wheels are in perfect alignment. In other words, teamwork through co-operation and collaboration is the key to success.

Our various levels of government should be adopting that approach to tackle the housing supply and affordability crisis. Political leaders must align their actions if they hope to make headway.

They should start by addressing the tax burden, which has been identified as one of the biggest impediments to the affordability of new housing. Presently, taxes, fees and levies – including development charges – account for a whopping 36 per cent of the cost of new housing.

Let me put that in perspective. On a new home costing $1 million, the tax burden therefore accounts for $360,000 of the price tag.

Yet, governments are not aligned on the fix.

The federal government has approved reducing the federal share of sales taxes, or GST, on new housing up to $1 million for first-time buyers and a partial rebate for first-time buyers of homes up to $1.5 million. However, the province has not followed suit with the HST due to concerns about cost. 

RESCON, like others, would like to see the tax burden removed altogether on all new home buyers – not just first-timers.

Tax Relief Is Key

Austin Thompson, an analyst at the Fraser Institute, stated in an article in The Globe & Mail that a broader GST rebate would cost more but deliver better results than the billions the government plans to spend on other housing-related programs, and is a lower-risk alternative.

He argues that tax relief is a better way to increase housing affordability than expensive spending programs.

As it stands, the proposed federal GST rebate will cost a projected $390 million per year. If the feds expanded the rebate to include all new homes under $1.3 million, it would cost $2 billion. 

Admittedly, it is a hefty figure, but would make housing more affordable and boost the new housing market. If the province also did the same with the HST, the results would be significant.

If we don’t see substantial action to kick-start the new housing market, layoffs in the residential construction industry will continue to climb. Already, many companies have laid off both office workers and sales professionals, as well as the skilled trades who build the projects. Tenders have been delayed or scaled back, or dismissed altogether. Many projects have been shelved.

Meanwhile, tradespeople, nurses, teachers and emergency responders are leaving our cities as they can no longer afford to live where they work, causing Ontario to lose billions in GDP annually.

And then there is the bureaucracy and red tape, which also stymies new housing and adds to costs.

Red Tape Must Be Reduced

WOWA, a personal finance website that compiles Canadian housing market data, notes that Toronto ranks third on a list of the 25 least affordable cities in North America. Vancouver is number one. The Canadian cities are worse than San Diego, San Francisco, and New York City.

Company CEO and founder Hanif Bayat wrote in the Globe & Mail that over the past decades, cities like Toronto and Vancouver have imposed restrictive zoning and red tape that choke supply.

The most practical fix, he suggested, is to ease zoning rules and cut red tape so builders can respond quickly to demand. 

New home sales are grim. That fact has become increasingly clear. Decisive action is needed.

Toronto is presently on pace for its lowest annual housing starts in 30 years, the CMHC reports. The city’s homebuilding activity in the first half of 2025 was the lowest on a per-capita basis since 1996, driven in large part by a 60-per-cent year-over-year decrease in condo starts.

Sales Continue to Slide

The residential construction industry has hit a wall. We have the worst new home and condo sales in a generation. Both the federal and provincial governments have committed to doubling housing starts, but the numbers aren’t adding up. New home sales continue to decline.

The decline in new home building will take its toll on the economy. In fact, cracks are already showing.

A staff report to Toronto’s executive committee indicated that the downturn in real estate transactions, and reduced sales activity, has resulted in a substantial shortfall in Municipal Land Transfer Tax revenue during the first few months of this year. If the rest of the year plays out as expected, funds from the levy are expected to fall $70 million short of original expectations for 2025. 

These types of numbers should be an eye-opener and spur governments to align their policies to support Ontario’s homebuilding industry.

All three levels of government must act in unison to address the housing crisis. Failure is not an option.