Every year, the home building and land development industry is tasked with the challenge of building quality, complete communities for up to 100,000 people and 50,000 jobs that choose to come to the GTA each year.
It’s no small feat, especially when the industry’s biggest challenge is to ensure that these people can afford to purchase these homes without sacrificing quality.
But with constrained land supply, an outdated approvals process and rising government fees and charges, it is becoming increasingly difficult to do so. In fact, building homes and businesses that people can afford is an issue that poses a significant challenge for the industry, new-home buyers and every resident in the GTA.
The building and development industry is one of the biggest economic engines in the region, creating more than 200,000 jobs each year. At the end of 2013, sales of new homes and condominiums in the GTA totaled just 28,406 – the second-lowest in the last 10 years.
It’s time for the industry, government and new-home buyers to start watching this market very carefully because today’s sales are tomorrow’s jobs.
Land supply has been an issue in the GTA for several years, with land prices more than doubling in the past decade. This diminishes the amount of new products our members can introduce into the market, and with less inventory come higher prices.
According to RealNet Canada Inc., the price index for a new condominium suite in the GTA is $436,564 while ground-related homes average as high as $654,147. While pricing in the high-rise sector has stabilized, new low-rise homes have more than doubled in price in the last decade and continue to grow.
That puts homeownership out of reach for many prospective purchasers, especially first-time buyers and new Canadians who are already struggling to save up for a downpayment.
According to the Altus Group, government fees and charges make up a considerable portion of the cost of a new home and are paid by new home purchasers. For a new high-rise condominium, these charges can add up to more than $64,000 – just below 20 per cent of the total cost. In the low-rise sector, that number jumps to 23 per cent and more than $116,000 on average.
Many of these charges are unnecessary and a result of outdated zoning bylaws across multiple municipalities. Municipalities must ensure that local Official Plans and zoning by-laws are up to date in order to help our industry implement the intensification policies set out by Places to Grow and save new-home purchasers money.
This was one of many solutions put forth to the Ontario government by BILD and OHBA as part of the province’s public consultation of the land use planning system, as well as the Development Charges Act and Land Use Planning & Appeals Systems.
You can read all the recommendations here.
We are all in this together – the industry, government and the consumer – and we must work collaboratively and with integrity to find solutions.
Despite these challenges, the new homes market in the GTA remains optimistic as stabilized condo pricing, low interest rates and strong demographics have contributed to five straight months of positive year-over-year sales. If you’re in the market for a new home in the GTA, now is a great time to buy.
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